The Serious Fraud Investigation Office (SFIO) will start probeinto Reebok’s alleged Rs 870 crores fraud within a week say sources. Maheshwar Dayal, Deputy Commissioner of Police, Gurgaon (east) affirmed that the Gurgaon Police, which is investigating the criminal aspects of the case, will begin questioning former and present company officials in the coming days.
“This is a complex case. The SFIO has not begun scrutinizing the papers yet. Formal investigations will take at least another week to begin,” says a corporate affairs ministry official. The ministry has handed over the responsibility of scrutinizing Reebok India’s accounts and questioning alleged irregularities in its book on SFIO, the country's fraud detection agency on May 28 pointing out non-cooperation from the side of Reebok India. As per officials, the investigation would be completed in four to five months. Reebok International was acquired by Adidas in August 2005 for $3.8 billion (Rs 21,052 crores) but the merger of their Indian operations was completed only in 2011.
Reebok India had filed an FIR against its former India managing director Subhinder Singh Prem and chief operating officer Vishnu Bhagat alleging the duo generated fictitious sales over numerous financial years, which were diverted to warehouses resulting in a loss of Rs 870 crores. The alleged scam came to limelight after an internal investigation was conducted by Padath Claus Heckerott, who replaced Prem as the group MD in India, and private firm Control Risks, which visited the said warehouses.
Dayal said that in a raid conducted by Gurgaon police last week, officials seized computers as well as property documents from the houses of both Prem and Bhagat. However, they are yet to ascertain whether the property documents directly relate to the alleged fraud.
On the other hand, both Prem and Bhagat have denied any accusations of wrongdoing. Prem has filed a suit against Adidas over defamation and abrupt termination of services. Similarly, Adidas too has filed a suit against Prem for defamation.
As report the international tax division of the Central Board of Direct Taxes had sent a notice to Adidas India Marketing asking for income tax returns for the financial year 2010-11 and a letter seeking information for previous years.