Reebok scales down loss on fictitious sales


Reebok scales down loss on fictitious sales

5 Jul 2012

Reebok India which has been making news for all the wrong

reasons of late has told the government’s serious fraud investigation office (SFIO) that the loss on account of fictitious sales is less than half of what it had originally alleged in its police complaint of May 21, according to a corporate affairs ministry official. Sources say it has scaled down the loss on account of fictitious sales from Rs 147 crores in the police complaint to Rs 68 crores. But while Reebok has scaled down the fictitious sales figure, it has added a new loss of Rs 170 crores on account of goodwill impairment, thereby keeping the total size of the alleged fraud in the Rs 870-900 crores region.

Meanwhile in a reply to the ICAI’s (Institute of Chartered Accountants of India) demand to give its version and clarification on allegations about its involvement in Reebok’s Rs 850 crores fraud case, Narsimhan & Co which is both the tax auditors and statutory auditors of Reebok India proclaimed their abstinence in any of the misdoings. ICAI had asked Reebok’s former Chief Operating Officer Vishnu Bhagat, who is also a CA to clarify. ICAI President Jaydeep Shah said that Narsimhan & Co has informed the institute that as far as the audit is concerned, it is all clear and no where they are involved in any fraud. He also said that the institute is waiting for some trigger from the company. ICAI had also sought the same from Reebok India which is still carrying out its internal investigation. Shah said that Reebok India has informed them that since the investigation is still going on, it won’t be able to share anything. However, the company has submitted its report of the FIR filed with the Gurgaon Police. Not only ICAI, but also Corporate Affairs Ministry’s body SFIO and I-T department is investigating the case.

In May, Adidas-owned Reebok India had filed an FIR, alleging that its former Managing Director Subhinder Singh Prem and Chief Operating Officer Vishnu Bhagat were involved in Rs 870 crores fraud by indulging in fraudulent practices over a period of time. However, both the executives had denied the allegations. Following this, an inspection of the books of accounts of Reebok India was ordered by the Ministry of Corporate Affairs (MCA). The case was later handed over to the SFIO.