Reebok India execs under I-T scanner

The Income Tax department,which had earlier this month conducted a survey at the Gurgaon office of the sportswear manufacturer,has recently collected additional financial documents including from some of those of the firm based in the country.

The I-T officials are also looking at the corporate structuring and financing of the company.

Notices for production of documents,personal transactions and I-T returns for the last four years have been sought by the authorities from the India-based executives of the firm for the I-T probe for checking possible financial wrongdoing in the company and subsequent tax evasion,sources said.

The I-T investigations directorate has also alerted its intelligence wing in this regard to supply it with necessary inputs after Adidas,owner of Reebok,recently claimed commercial irregularities in its India operations.

As per the FIR filed yesterday,by the company with the Gurgaon police,against its former MD Subhinder Singh Prem and COO Vishnu Bhagat,Reebok India alleged that the duo had indulged in 8220;criminal conspiracy8221; and 8220;fraudulent8221; practises over a period of time that resulted in Adidas group taking a 8220;total hit of approximately Rs 870 crore in the books.8221;

Reebok India is a part of the Adidas group.

In the FIR,Reebok India had further said it will also incur a restructuring cost of Rs 487 crore to remedy the consequences of the 8220;criminal and fraudulent8221; acts of its formers top executives.

The I-T department,according to sources,has also asked the Gurgaon tax assessment range to dig out past returns filed by the firm and the TDS payment receipts which would be tallied with the documents seized by the sleuths during their survey.

The taxmen had collected documents related to sales and purchase made by the firm during the last financial year and few others,including trade receipts processed by the company during the survey operation.

Earlier this month,Adidas group had announced that it had uncovered commercial irregularities to the tune of 125 million euros in its subsidiary Reebok India,and that Prem and Bhagat were sacked.

It had also announced plans to close one-third of around 900 Reebok stores as part of a restructuring strategy.

Reacting to the development,Prem had initiated legal action against the global giant for defamation and unfair termination of his services.

Reebok fraud case amount 8216;far from reality8217;: Gurgaon Police

The Gurgaon Police,which is investigating the alleged Rs 870-crore fraud in Reebok India by former MD Subhinder Singh Prem and COO Vishnu Bhagat,today said the company8217;s claim is 8220;far from reality8221; and the amount 8220;would be less8221;.

8220;The amount involved in the scandal would be less,8221; Maheshwar Dayal,DCP East,Gurgaon said.

When asked what could be the magnitude of the scandal,he did not elaborate but said the company8217;s claim that it will have to take a total hit of approximately Rs 870 crore and will have to incur a restructuring cost of Rs 487 crore is 8220;far from reality8221;.

When contacted,the company as well as Prem and Bhagat declined to comment.

Giving an update on the investigation so far,Dayal said three,out of 8220;four secret warehouses8221;,which Prem and Bhagat had allegedly operated to 8220;keep diverted and stolen stocks8221; have been found to be empty.

The possession of fourth 8220;secret warehouse8221; where some goods were found was taken by the company,he added.

All the four warehouses are in Delhi 8211; two in Bijwasan and Vasant Vihar each.

Reebok India,in its FIR filed on May 21,had stated that it has nine official warehouses but alleged that Prem and Bhagat were 8220;operating four secret warehouses to keep the clandestinely diverted and stolen stocks8221; which were not reported in the books of the company.

Reebok India had alleged that Prem and Bhagat had indulged in 8220;criminal conspiracy8221; and 8220;fraudulent8221; practices over a period of time that resulted in a loss to Adidas group.

While the FIR had mentioned the loss at 8220;approximately Rs 8,700 crore8221;,Dayal had clarified yesterday that the company in its original complaint had stated that the hit due to alleged fraudulent practice of its two former top executives was 8220;Rs 870 crore8221; and the amount mentioned in the FIR was a typographical error.

Reebok India further said it will also incur a restructuring cost of Rs 487 crore to remedy the consequences of the 8220;criminal and fraudulent8221; acts of its formers top executives.

Dayal further reiterated that now 8220;the onus for proving these former two senior officials guilty lies with the company8221; and that was why the police had sought relevant documents and proof from Shahin Padath,Director,Finance,Reebok India.

So far the police have not received any other documents except the copy of the complaint now from the company,he added.