GERMANY: Adidas accuses former Reebok India execs of fraud
Adidas-owned Reebok India has submitted a criminal complaint against two senior executives over the irregularities in the business.
Adidas India managing director Subhinder Singh Prem and COO Vishnu Bhagat have been accused of stealing products, setting up secret warehouses and fixing accounts, leading the company to lose INR8.7bn (US$155.3m), according the Times of India.
The reports also claim the two executives raised invoices for products that had already been invoiced and delivered to customers.
In a statement sent to just-style today (23 May), Adidas said: "We are given to understand that the our criminal complaint has been registered for investigation by the Indian law enforcement authorities."
The company said the matter is now in the hands of Indian law enforcement authorities. "We shall continue to cooperate with the authorities in their investigation of the matter," the statement added.
In April, Adidas revealed a 38% increase in net income to reach EUR289m (US$382m), which it attributed to lower financial expenses and a lower tax rate.
However, it added that "commercial irregularities" discovered in its Reebok India company were likely to affect the group's consolidated financial statements.
In March, Adidas revealed that Prem and Bhagat left the company. The Times of India claimed there had been allegations of financial discrepancies and losses at the group's Indian unit following the merger of Adidas and Reebok's Indian units last year.
The two global sportswear companies merged in 2005.
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Adidas has made dramatic cuts to the long-term revenue targets for its Reebok brand, which has been impacted by lost business in the US and fraud allegations in India....
Reebok, which is owned by sporting goods giant Adidas, has removed the position of global president, moving Ulrich Becker to president of the brand's North American business....
Some 100 Adidas workers at its Reebok India business are staging protests against the sportswear giant's new franchise model, according to reports....
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