Reebok India asks govt for 'fair' review of SFIO charges

Fearing legal action against its German parent Adidas Group, Reebok India has represented to the government for a “just and fair” review of the Serious Fraud Investigation Office charges against its senior officials and the global board in the Rs 870-crore fraud at Reebok India.

“We apprehend that erstwhile managing director Claus Heckerott and chief financial officer Shahin Padath, who were really the whistleblowers and the complainants, may be wrongly indicted in the case along with actual conspirators and perpetrators of the irregularities,” Reebok India head Eric Haskell wrote to the Minister of Corporate Affairs last month.

“We are apprehensive that the executive board of the Adidas Group in Germany may also be wrongly embroiled in the matter, though they have had no hand in the alleged irregularities,” wrote Haskell on July 31 while enclosing papers to prove their innocence.

The letter, copies of which were also sent to ministers of finance, commerce and law, requests them to “issue directions that the whistleblower /complainant Shahin and Claus should not be treated at par with the perpetrators and also the executive board in Germany is not embroiled in the issue”.

Reebok India had filed an FIR with the Gurgaon police accusing former managing director Subhinder Singh Prem and ex-chief operating officer Vishnu Bhagat of manipulating sales figures as part of a big financial fraud.

Claus, along with other members of the executive board in Germany, are accused of being party to the practice of inflating sales by not deducting the merchandise returned by RIC’s franchisees as “sales return”.
Haskell claims that they were engaged in the planning for dealing with excessive inventory with franchisees but were not involved in the booking of sales return for goods actually returned.

“It appears that certain emails and communication regarding provisioning for sales returns or whether to allow customers to return goods may have been misunderstood by the SFIO as being related to non-booking of sales returns for goods already given back by the franchisees,” he says.

The practice of fictitious sales, he says, came to the knowledge of Shahin, Claus and others only after the termination of Prem and Bhagat.

The SFIO has found inconsistencies with the company and 11 former employees Reebok India were accused of cheating. SFIO has found complicity of 26 persons out of which 11 are the ones charge sheeted by the Gurgaon police.

It plans to book Reebok India on 23 charges under various sections of the Companies Act and the Indian Penal Code — the main being falsification of accounts under section 477 A of the IPC where imprisonment is up to seven years and section 628 of the Companies Act which entails imprisonment of up to two years.

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