Several Reebok India employees could be under the scanner, as investigation agencies fear more employees being involved in the alleged scam that may set back its parent company by Rs.870crore. A senior Gurgaon police official told ET that the alleged fraud as in the complaint registered by the parent company Adidas cannot be the handiwork of just two people. Adidas had only named Reebok’s former managing director Subhinder singh  prem and former Vishnu bhagat in its FIR registered with Gurgaon police for the alleged fraud.“Prime facie the FIR suggests that either a loophole in the system was exploited the hilt and there was no accountability or there was a whole team involved,” the official added refusing to be named given the sensitivity of the matter.
Gurgaon police has already sat up in a special investigative team of four people headed by an assistant commissioner of police to further investigation. We have asked Adidas to provide documents for the allegations made in the FIR. Once we receive that further raids and questioning will be done if the police has made any raids so far. Adidas Group said we are given understand to that our criminal compliant has been registered for investigation by the Indian law authorities.We can not provide any further details since the matter now rests with the Indian law authorities. We shall continue to cooperate with the authorities in their investigation of the matter

The German based company set up and internal investigation firm to the role of its other employees. Who many have acted in connivance with prem and bhagat Adidas had earlier said it would cut the no. of Reebok store and India by one third and a take hit of Rs.870crore to financial irregularities at Reebok’s Indian operations.Concerns on the affairs started arising way back in 2010 within the Adidas group doe to huge account receivables and excess inventories that were later discovered by CFO Shahin Padath.Adidas has claimed they will now have to cost of over Rs.487crore while the parent company has suffered damage to Reebok and Adidas reputation.

One person with direct knowledge of the development said Adidas was forced to file a criminal complaint against Prem and Bhagat after the issue come to light through media reports. “After all the company is to its stakeholders back in Germany,” he said the company now to want take this to a logical conclusion and its against any out of court settlement.In its latest complaint Adidas Indian has said that there was misappropriation of funds inventory diversion padding for sales incentives. Which also led to increase in taxes A person close to  Subhinder singh said that the FIR nowhere states that there has been any instance of funds or embezzlement by any of the accused at any point of time The FIR itself admits at various places that the received in the company bank’s accounts and all payment were made to genuine parties through banking channels indeed the FIR also admits that’s the goods of the company Singh said refuting most of the charges leveled against him.He also added to that are very strange because all the decisions of the accused person were approved by the complaint himself Shahin and the German parent entity has been the group CFO since the last 15 months.

The company has alleged that the both the former officials stole products worth Rs.62.99crore and kept them in four secret warehouses as well as engaged in fictitious sales for several years.The copy also mentioned that a referral program was started by the accused where amount were collected on the pretext of opening of stores despite instructions from the Adidas group headquarters in October 2010 to not expand the store base further. However almost no financial store were opened under the scheme despite Rs.114.26crore being collected from various investors which incurred another Rs.14.82crore interest charge at the rate of 24-33%. The company later posted funds as amount received from customers towards outstanding payment.

The company has also accused the two former executives of rising invoices of RS.86crore on customers for products already invoiced and delivered in the last tow calendar years to claim bonus and incentives the company did not pay them any bonus for years 2010 and 2011. they were paid a long term incentive in which payable under Global incentives of local business performances added Singh.In addition both executives were accused of cheating and fraud through maintenance of hidden accounting records including giving extra margins to the tune of over Rs.530crore. during the last two calendar years invoices were raised against customers to the tune of Rs.85.61crore as artificial and retrospective price increases.