Reebok India accuses former top duo of fraud

Mumbai : Reebok India, owned by Germany's Adidas, lodged a police complaint against two former top executives accusing them of fraud that had led the company to lose Rs8.7 billion (Dh580 million).

According to local media reports, the company alleged that the two former officials stole products, set up secret warehouses, fudged accounts and engaged in fictitious sales for several years.

Adidas bought US rival Reebok in August 2005 for $3.8 billion but their Indian operations were merged only in 2011.

The alleged fraud would be the most high-profile corporate scandal in India since 2009 when Satyam Computer's former chairman and founder Ramalinga Raju revealed that the company had overstated profits and falsified assets for years.

Reebok India is accusing former India Managing Director Subhinder Singh Prem and former Chief Operating Officer Vishnu Bhagat of financial wrongdoing, said police officials in the northern city of Gurgaon, where the complaint was filed.

Statement

"Our criminal complaint has been registered for investigation by the Indian law enforcement authorities," Adidas said yesterday, without giving further details.

Adidas said in March that the two men had left the company.

"We have started our investigation and will now be checking the records of the company and carrying out an audit," an officer with the economic unit of the Gurgaon police told Reuters by phone on condition of anonymity.

Prem filed a suit against Adidas after the German company's announcement and claimed damages of Rs150 million, according to the Economic Times. The newspaper said Prem denied any involvement in financial irregularities.