The battle between German sportswear giant Adidas AG and its former managing director in India Subhinder Singh Prem escalated on Thursday after he sent a legal notice to the company and its CEO Herbert Hainer.
Adidas chief executive officer Herbert Hainer is expected to be in India soon, as the local unit of the German sportswear maker, Reebok India, finds itself embroiled in a controversy, following the exit of its senior management, including Adidas India managing director Subhinder Singh Prem, amid allegations of commercial irregularities.
Former company MD likely to file a legal notice against his former employers
SFIO official refuses to reveal the nature of additional charges found during investigation.
In March, Adidas had announced top level management change and appointed Germans on the top positions.
The special investigation team of Gurgaon police, which is probing the case, has said that it has found four illegal warehouses, whose existence was not disclosed to auditors, tax authorities or to the Adidas management in Germany.
In a new twist to the battle between German footwear major Adidas and its key former employees, a trial court in Gurgaon denied anticipatory bail to Subhinder Singh Prem, former managing director, and Vishnu Bhagat, former chief operating officer, of the company in India.
E&Y has given the report to the Gurgaon police.
The investigative arm of corporate affairs ministry says there may also be involvement of others in alleged fraud, besides top executives.
German sportswear maker Adidas has disclosed to the Serious Fraud Investigation Office (SFIO) that it lost around Rs 170 crore (Rs 1.7 billion) because of "goodwill impairment" after it bought Reebok.
Erick Haskell takes over from Claus Heckerott.
Executives caused loss of Rs 11 cr, according to police SIT.
Reebok India on Friday said it has set a Rs 250 crore (Rs 2.5 billion) sales turnover target for the current calender year, up by 50 per cent over last year, and plans to open another 20 exclusive showrooms across the country.
According to SFIO, the modus operandi of the Reebok fraud involved filing fictitious invoices to show inflated sales, recording fictitious sales by raising prices of goods sold.
The German sportswear maker has brought Haskell, who played a key role in writing the growth story for Adidas in China, to give Reebok's India business a 'fresh start' after the alleged Rs 870-crore (Rs 8.7-billion) fraud by former managing director Subhinder Singh Prem and chief operating officer Vishnu Bhagat.
To put its Reebok business in order, the German footwear major hand-picked the soft-spoken Erick Haskell, who has vast experience of working in China.
