Reebok faces heat from Serious Frauds Probe Office

The sportswear maker has not submitted audited accounts for 2011

Turning the fire on to the company itself, Serious Fraud Investigation Office (SFIO) officials say Reebok India is causing delay in a probe into its complaint against its two top former employees for alleged financial irregularities and fraud.

“We need the audited accounts from the company for 2011 to substantiate our claims in the investigation report. We are mostly through with our probe but we are not able to wrap it up because the company has not yet submitted the accounts for the period when most of the irregularity took place,” says a key SFIO official, engaged in the probe.

SFIO, the corporate fraud investigative wing of Ministry of Corporate Affairs (MCA), started a probe into the Reebok India case in May last year and was expected to submit its report by October 2012.

However, in the absence of the accounting details from the sportswear maker, the SFIO is yet to finalise its report.

“Once we receive the audited accounts from the company, it will take us another 15-20 days to finalise and formulate our report,” the official said.

Reebok was required to submit its audited annual accounts for 2011 by September 30. However, the company twice sought extension of the date from the Registrar of Companies (RoC) till December 31, 2012, along with permission to submit audited accounts for a period of 15 months, starting January 2011 to March 2012. It got these permissions.

Despite this, the company has so far failed to meet its latest deadline of December 31 for submitting the accounts.

Adidas, the German parent of the company, maintains that it has extended all co-operation to the authorities investigating the case and will continue to do so. Its recently appointed head of India operations Erick Haskell said, “There are tremendous volumes of accounts which is taking time. We will submit the audited accounts to RoC as soon as possible.”
He, however, declined to attribute a time frame by when the company is expected to submit the accounts.

Meanwhile, the Gurgaon police has filed a chargesheet in the case in November. As per the chargesheet, the total loss incurred by Reebok India on account of alleged financial irregularities is merely Rs 11.3 crore. A total of 12 people have been named by the police in the case.

The amount alleged in the chargesheet is very small compared to Rs 870 crore as alleged by the company in its First Information Report (FIR) to the police.