New Delhi: An investigation by Serious Fraud Investigation Office (SFIO) has been ordered into the affairs of sportswear major Reebok India for alleged embezzlement of funds, the government said today.
Asked for details of actions taken by the government in this case, the Ministry of Corporate Affairs today informed Parliament that a probe has been ordered by SFIO, but no person has been arrested so far in the matter.
To a question whether a case of embezzlement of Rs 1,300 crore has come to light against former Managing Director of Reebok India Company, Minister of State for Corporate Affairs R P N Singh replied in affirmative.
Reebok India’s franchisees from Delhi have accused the company of asking them to shut their shops by August 31 if they do not agree to the new business model. AFP
“On the basis of media reports, the Ministry has ordered investigations into the affairs of Reebok India Company … on May 29, 2012, to be conducted by SFIO of this Ministry,” Singh said.
When asked whether the Ministry has constituted any committee to look into such kind of embezzlements, the minister said that no need was felt to set up any separate committee as the Ministry of Corporate Affairs has already established SFIO to probe instances of such matters.
In May this year, Reebok India had filed an FIR, alleging that its former Managing Director Subhinder Singh Prem and Chief Operating Officer Vishnu Bhagat were involved in a Rs 870 crore fraud by indulging in “criminal conspiracy” and “fraudulent” practices over a period of time.
Besides SFIO, the Income Tax Department is also probing the alleged financial irregularities in Reebok India Company.
The company’s German parent Adidas has previously said that the global sales of its Reebok brand declined by 26 per cent in April-June quarter, mainly due to impact from Reebok India Company.
The Group had also said it expected a hit of 70 million euro (about Rs 490 crore) in its global operating profit in 2012 on account of “irregularities” in Reebok India.
Recently, Reebok India’s franchisees from Delhi have accused the company of asking them to shut their shops by August 31 if they do not agree to the new business model.
The franchisees have also alleged that the company has refused to settle the dues in violation of their franchise agreement.
The franchisees claim they were hired by Reebok under the Minimum Guarantee (MG) basis, in which they used to get fixed returns on investments irrespective of sales.
Without getting into specific allegations, Reebok has said it will “follow good standards of respectful and professional conduct to engage with our stakeholders while restructuring the business”.
PTI
