Indian police investigate $158M Reebok fraud

AP News
Posted: May 23, 2012 8:35 AM
Indian police investigate $158M Reebok fraud

Germany's Adidas Group said Wednesday that Indian police are investigating two former executives from its Reebok India unit for an alleged fraud that could cost the company tens of millions of dollars.

Adidas spokesman Jan Runau said the executives under investigation are former managing director Shubhinder Singh Prem and former chief operating officer Vishnu Bhagat. They both left Reebok India in March.

A police report says the pair filled four warehouses with stolen merchandise, falsifying bills and siphoning off goods to fake companies and distributors for years, local media reported. Prem has denied the allegations and is suing Reebok for damages, according to local media.

The Associated Press could not immediately obtain a copy of the police complaint which details the allegations.

Reports of the financial impact of the alleged fraud varied widely. The Press Trust of India reported that the fraud resulted in a loss of 13 billion rupees ($232 million), while the Times of India and the Hindustan Times pegged it at 87 billion rupees ($1.6 billion).

Runau said those numbers were "pure speculation."

He said the company stood by its April 30 disclosure that irregularities in the India business could cost up to 125 million euros ($158 million), with related restructuring charges of up to 70 million euros ($88 million).