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Govt starts prosecution proceedings in alleged fraud at Reebok India

Reebok India had alleged fraud by its former MD Subhinder Singh Prem and former CFO Vishnu Bhagat.

Written by Press Trust Of India | New Delhi | Published: December 30, 2013 2:13:58 am

The government has started prosecution proceedings in the case of alleged financial fraud at sportswear maker Reebok India.

This follows the serious fraud investigation office (SFIO) submitting its report to the corporate affairs ministry on the case,which relates to allegations of financial misconduct at the sportswear major’s India operations. In its FIR filed with police last year,Reebok had alleged financial fraud to the tune of R870 crore at the company by certain persons,including senior executives of its India arm.

“Whatever the SFIO findings were and the people involved,the prosecution has been sanctioned… The prosecution has started. We took legal opinion and did what was the best thing to do,” corporate affairs minister Sachin Pilot said. He did not provide further details on the prosecution exercise.

Reebok India had alleged fraud by its former MD Subhinder Singh Prem and former chief financial officer Vishnu Bhagat. Both of them have denied the charges.

Adidas,the German parent firm of Reebok,has communicated to the ministry that the global management team of the company acted like a whistleblower in bringing the fraud to light and they should be kept out of any prosecution.

Pilot said “anybody who is a whistleblower or someone who has flagged the issue and reported something,then to prosecute them perhaps is not the best thing”. “The view we got from many sources was that if you are a whistleblower and you are a complainant,you can’t then also be prosecuted for the same case,” he added.

A Reebok India spokesperson,in August this year,had said it was important to reiterate that the company was the primary victim of the fraud. “In fact,the company discovered the fraud and was the whistleblower to the government. The company has in the past fully supported the authorities in their probe and will continue to do so,” the spokesperson had said.

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