INDIA: Reebok reportedly booked for FEMA violations
Adidas-owned Reebok India may face penal action and money laundering charges for running unauthorised retail outlets as well as breach of export commitments, according to local media reports.
The company is said to have been booked by the government's Enforcement Directorate for alleged violations of the Foreign Exchange Management Act (FEMA). The department is responsible for enforcing economic laws and fighting economic crime.
A case for alleged FEMA violations has been registered against Reebok India as the firm failed to keep its commitment to export goods worth INR80m in the first 10 years of its operations, according to reports in the Economic Times.
Reebok was allegedly allowed to begin operations in India after agreeing not to engage in retail sales and meet export commitments. It also promised not to import goods that could be manufactured locally.
The Economic Times reported that the investigation found Reebok India hardly manufactured any goods locally, importing most of its products from South East Asia.
A spokesperson for Adidas told just-style that it has responded to the authorities in the past and "proven that the Adidas Group fully complies to the conditions set by the respective regulatory bodies of the country.
"In case of any further queries we will continue to extend full cooperation to them. Please understand that we cannot share any further details."
The spokesperson emphasised that the case is unrelated to ongoing investigations in its Reebok India operations, which led to the group's senior management staff being axed and the group forecasting an hit of up to EUR125m after it discovered commercial irregularities earlier this year.
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