Reebok fraud more widespread than police initially thought

While Reebok India has only named two senior company officials in the alleged fraud complaint which has cost the company Rs 870 crore, an E_conomic Times_ report today says that many more Reebok India employees may face investigation for the irregularities listed in the complaint.

Another report in the Times of India pointed out that the Gurgaon police made typographical errors while registering the FIR against former Reebok executives and said the apparel and sports goods maker had alleged that it would take a hit of Rs 870 crore - and not Rs 8,700 crore - due to the irregularities by two ex-employees.

[caption id=“attachment_319539” align=“alignleft” width=“380” caption=“AFP”]  [/caption]

The two ex-employees are accused of forging records, stealing goods and creating ghost distributors across the country to defraud Reebok over five years. Gurgaon Police has already set up a special team headed by an assistant commissioner of police to investigate the alleged fraud that may set Reebok’s German parent company Adidas, back by Rs 870 crore.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

Meanwhile, the ministry of Corporate Affairs has directed the Registrar of Companies (RoC) to conduct a preliminary investigation into the alleged “Rs 8700-crore” fraud case filed by Reebok India against its former MD Subhinder Singh Prem and COO Vishnu Bhagat. “The Registrar of Companies has been asked to submit its report in three days. Based on the report, we will order further scrutiny,” a senior MCA official told PTI.

On Wednesday, Reebok India had filed an FIR with the Gurgaon Police in which it said it will also incur a restructuring cost of Rs 487 crore to remedy the consequences of the “criminal and fraudulent” acts of its former top executives. In its FIR, Reebok has alleged that Prem and Bhagat stole products worth Rs 62.99 crore and kept them in four secret warehouses, and engaged in fictitious sales for several years, said the ET report.

Impact Shorts

More Shorts

Tata Harrier EV vs Mahindra XEV 9e: Design and road presence compared

As Trump weaponises tariff, Fed sees a bigger worry: Not jobs, but rising prices in America

Earlier this month, Adidas group had announced that it had uncovered commercial irregularities to the tune of 125 million euros (around Rs 883 crore) in its subsidiary Reebok India and Prem and Bhagat were sacked. It had also announced plans to close one- third of around 900 Reebok stores as part of a restructuring strategy.

Reacting to the development, Prem had initiated legal action against the global giant for defamation and unfair termination of his services. He is claiming Rs 150 crore in damages, suggesting that he had been made a scapegoat f or exposing fraud at the company.

“We have gone through the contents of the FIR. All allegations are false and fabricated and it is very clear that this is an attempt to inflict grave harassment on us because we acted as whistle blowers on various fraudulent as well as illegal activities being carried out by the Adidas management people,” he said in an email statement to CNBC-TV18.