E&Y audit finds fake transactions at Reebok India


E&Y audit finds fake transactions at Reebok India

26 Nov 2012

A forensic audit of Reebok India has found fake transactions

with unauthorized customers, allegedly concocted to exaggerate the company’s revenue and possibly aimed at meeting targets. It also shed new light on a messy affair that is being investigated by both the Gurgaon Police and the Serious Fraud Investigation Office (SFIO), an arm of the ministry of corporate affairs.

The audit, conducted by the German arm of Ernst and Young (E&Y), shows transactions between Reebok India and companies owned by Sanjeev Mishra, who ran a staffing services company that supplied contract employees to the shoemaker, among other circuitous and complex transactions. The audit also shows leakages in some transactions that seem to have benefited various individuals or other entities. However, it is silent on the exact gains derived by the main accused.

Adidas AG acquired Reebok International, the parent of Reebok India, in 2005. In May this year, Adidas claimed it had uncovered a fraud of the magnitude of Rs.870 crore at the Indian operations of Reebok. Since then, 12 people, either former employees of Reebok India, including its former managing director Shubhinder Singh Prem and former chief operating officer Vishnu Bhagat (the two are the main accused), or associates like Mishra, have been arrested.