A bunch of jewellers including marquee names such as the Gitanjali Group as well as Rosy Blue, which is among the world's largest diamond manufacturing companies, has moved the Bombay High Court against FMCG major Godrej Consumer for recovering their dues, estimated to be around Rs 35-40 crore.
Almost seven suits have been filed by various jewellers including Asmi from the Gitanjali Group and Intergold from Rosy Blue seeking to wind up and recover their dues for supply of gold coins and diamond studded jewellery made to GCPL. These items were used by GCPL to incentivise trade to boost sales. The practice is common in consumer companies as a means to motivate trade partners.
The matter pertaining to GCPL goes back three years when the jewellers weren't paid for the supplies made to the company since they were deemed as fake orders by the latter.
A former employee Amit Gaine, who was a deputy general manager in charge of purchases at GCPL, had been placing the orders on behalf of the company for his personal use it was detected. Following detection, Gaine was sacked and his laptop seized by GCPL. The matter was also reported to the Economic Offences Wing at that time and Gaine was sent to judicial custody.
An executive from the Gitanjali Group, who declined to be identified, said that from then to now, the company alongwith other jewellers had exhausted all possible avenues to recover their dues and were hence moving the courts. "We were dealing with Gaine and he was corresponding with us through his official email id. We subsequently supplied the goods at the premises of the company. How were we to know that he was not acting on behalf of GCPL?," asks Philip Trott, group company secretary and head of legal at Rosy Blue.
In response to a mail, a GCPL spokesperson said, "We deny the liability. The matter is sub-judice at this stage. The company will oppose the petition as and when it comes up before the court for hearing."
But the issue of financial fraud in Indian companies has been growing over time. According to a survey by New-York-headquartered risk management and consulting firm Kroll Advisory Solutions, Indian firms were the most affected by fraud in 2012 at 68 per cent, followed by China and Indonesia at 65 per cent respectively.
The reason why Indian firms, said experts, were most affected by fraud was because many of them had no effective mechanism to tackle white-collar crime. A KPMG report released last year pegs the number of such firms who are unable to detect fraud at the workplace at 70 per cent.
More often than not, said KPMG, it was new as well as old employees, agents and vendors who were perpetrators of white-collar crime. The avenues to commit fraud were also growing with the internet emerging as once such medium besides corruption, bribery, giving kickbacks, forging and providing false information being some of the other methods by which white-collar crime was committed in the country.
Of the prominent cases of fraud that surfaced in the last one year in India included the one concerning former Adidas employees Subhinder Singh Prem and Vishnu Bhagat. The two alongwith three other employees were arrested last year following a police complaint lodged by Adidas with the Gurgaon Police alleging that Prem and Bhagat had siphoned off money from the company by creating ghost distributors and generating forged bills over five years. The fraud was pegged at Rs 870 crore by Adidas.
