The Two Reebok Mafias

Former MD Shubhinder Singh Prem and former chief operating officer Vishnu Bhagat have been under the scanner for the recent Reebok India scam, where the German sportswear Adidas, who owns the Reebok brand has filed a case of fraud, cheating and theft. Alongside, Shahim Padath who is the company’s financial director lodged a complaint for siphoning the company’s funds & forging bills since 2005.The scam is reportedly a Rs 870crore deficit claimed by the Gurgaon Police, who along with the Income Tax Department conducted an investigation at the Gurgaon office of Reebok India. They have been asked to submit necessary documents, I-T returns & personal transactions which will enable the departments to make necessary investigations. An internal investigation has reported a theft of Rs62.99 crore worth merchandise as on 31^st December, 2011.

The FIR lodged with the police on 21^st May,2012 states that these employees have set up warehouses which no one from the company was aware of, duplicated accounted & shown false sales which has led a major financial drain for the company. All the four warehouses are in Delhi i.e two in Bijwasan and Vasant Vihar each. The 4 rented ware houses were used for storing good without the knowledge of the operations team knowing anything about it and then were later transported to genuine Reebok dealers across India. Out of the warehouses, 3 are empty and in the 4^th one there were few goods found which have been taken under the control of Adidas India who believes that these officials had stashed good worth Rs 63crore. Moreover, they were drawing out goods from the warehouses stating that they were defective & sending them out to authorized dealers who were unaware of this blocked business view. It is believed that the company operates from 9 warehouses for operational purposes & apart from these 4 others were being used on terms of criminal conspiracy for diversion of goods.

Mr Shubhinder  Prem was appointed the managing director of the combined entity between Adidas & Reebok after 2011 while Mr Vishnu Bhagat was yet handling finance in the firm. This has given rise to a worry amongst the 35 franchisee across India who have pushed a joint letter to the CEO and other officials of Adidas, requesting pending payments. Though, Reebok India has already announced that they are ready to spend a cost of Rs 487crore to overcome or avoid the consequences of the fraudulent activities. An immediate effect of this scam was dismissal of Mr Singh, the Managing Director who was in charge of business operations after integration of Adidas India & Reebok. This scam had terribly put to risk 40,000 jobs who currently work with Reebok & Adidas at functioning offices & stores in India.

For a further look into this the Gurgaon police has formed a Special Investigation Team who will help them figure out important evidences required to form the base of investigation in this scam. This team which will be headed by ACP head Rajesh Phogat plans to cease accounts of Prem & Bhagat to guage the amount they have transferred during their association with Reebok India. The Gurgaon Police will also help the SIT to keep a check on all the accounts which are under operations.