While the investigations over Rs 870 crores alleged fraud at itsIndia operations is going on, Reebok India has hired consulting firm Ernst and Young (E&Y) to help restructure and smoothen its operations. The agency would work on a two-way strategy. First, it would analyse as to what actually went wrong at Reebok and second, it will work on mending the loopholes. Reebok India, in an emailed statement has said that it has hired E&Y for a business review. “As announced earlier, we are reviewing our business activities and making changes to our commercial practices at Reebok India as a part of our Route 2015 profit-enhancing initiatives. We have engaged the services of Ernst and Young to help us in this process,” the company said.
While KPMG, the company’s global auditor, is supposed to be auditing the books of Indian arm as well, according to a recent media report, KPMG India could also come under the scanner of law enforcement agencies looking into the alleged financial irregularities at Reebok India. Adidas had hired the forensics arm of KPMG in March 2010 to secretly investigate suspected irregularities at Reebok India. Around that time, Reebok India was getting integrated with the local unit of Adidas.
Adidas had acquired Reebok globally in a $3.8-billion (over Rs 2,000 crores) acquisition in 2005. But the merger between the two in India happened only in 2011.