SFIO to soon start prosecution proceedings in Reebok case

NEW DELHI: The Serious Fraud Investigation Office (SFIO) is expected to soon start prosecution proceedings in the case of alleged financial fraud at sportswear maker Reebok India.

The case relates to allegations of financial misdoings at the sportswear major's India operations. In its FIR filed with police last year, Reebok India had alleged financial fraud to the tune of Rs 870 crore at the company.

Sources said that SFIO has received the go-ahead from the Corporate Affairs Ministry to proceed with prosecution in the Reebok case.

The investigation agency is expected to soon start prosecution proceedings at the concerned court, they added.

Specific details could not be ascertained immediately. SFIO, which submitted its final report on the case to the Ministry in August this year, is said to have found violations by the Indian as well as overseas management personnel at Reebok, sources had said.

The Corporate Affairs Ministry had sought opinion of the Law Ministry on certain aspects of the probe report before finalising its view.

In August, Corporate Affairs Minister Sachin Pilot said the Reebok case had a long investigation and that there are "some substantial findings".

Without divulging details, Pilot had also said the SFIO report was quite comprehensive.

Reebok India had alleged fraud by its former Managing Director Subhinder Singh Prem and former Chief Financial Officer Vishnu Bhagat. Both of them have denied the charges.

Sources had said that Adidas, the German parent firm of Reebok, has communicated to the Corporate Affairs Ministry that the global management team of the company acted like a whistleblower in bringing the fraud to light and they should be kept out of any prosecution.

Last week, Adidas Group India Managing Director Eric Haskell said that fraud at Reebok India is "deep in the past for us".

Earlier in August, a Reebok India spokesperson said the company has not seen the SFIO report and therefore cannot comment on it.

"It is important to reiterate that Reebok India Company was the primary victim of the fraudulent activity. In fact, the company originally discovered the fraud and was the whistleblower to the government authorities.

"The company has in the past fully supported the authorities in their investigation and will continue to do so," the spokesperson had said.

In March this year, Adidas said its balance sheet for 2011 was negatively impacted by 153 million euros on account of commercial irregularities at its arm Reebok India.