Gurgaon: The Gurgaon Police has formed a special investigation team to look into the alleged Rs 870- crore fraud case filed by Reebok India Co against its former MD Subhinder Singh Prem and COO Vishnu Bhagat.
"We have constituted a special investigation team to be headed by Assistant Commissioner of Police Rajesh Phogat for the purpose," Maheshwar Dayal, DCP (East), Gurgaon, said.
He also clarified that the company in its original complaint had stated that the hit due to alleged fraudulent practice of its two former top executives was "Rs 870 crore" and the amount mentioned in the FIR was a typographical error.
As per the FIR filed yesterday, Reebok India alleged Prem and Bhagat had indulged in "criminal conspiracy" and "fraudulent" practices over a period of time that resulted in Adidas group taking a "total hit of approximately Rs 8,700 crore in the books".
Reebok India is a part of the Adidas group.
In the FIR, Reebok India further said it will also incur a restructuring cost of Rs 487 crore to remedy the consequences of the "criminal and fraudulent" acts of its formers top executives.
Asked about the progress of the case, Dayal said: "Now, we have asked the complainant to give us documents and other evidence to prove that a scam of this magnitude has happened in the company."
When contacted, Adidas Group said: "We are given to understand that our criminal complaint has been registered for investigation by the Indian law enforcement authorities...We shall continue to cooperate with the authorities in their investigation of the matter."
Adidas, however, declined to comment further saying,
"Please understand that we cannot provide any further details since the matter now rests with the Indian law enforcement authorities."
Dayal further said: "No arrest is possible till the police establish the allegations."
Prem and Bhagat could not be reached for comments.
The case has drawn attention of politicians, with Milind Deora, Minister of State for Communications & Information Technology, calling for checking corruption in private sector.
"Like Satyam, the Reebok India scandal highlights the need for regulating graft in the private sector to protect shareholder interest," Deora tweeted.
Earlier this month, Adidas group had announced that it had uncovered commercial irregularities to the tune of 125 million euros in its subsidiary Reebok India and Prem and Bhagat were sacked. It had also announced plans to close one- third of around 900 Reebok stores as part of a restructuring strategy.
Reacting to the development, Prem initiated legal action against the global giant for defamation and unfair termination of his services.
Later in the day Subhinder Singh Prem and Vishnu Bhagat in a joint statement said: "We have gone through the contents of the FIR. All allegations are false and fabricated and it is very clear that this is an attempt to inflict grave harassment on us because we acted as whistleblowers on various fraudulent as well as illegal activities being carried out by the Adidas management people."
It further said the allegations are in retaliation to their recovery suits they have recently filed in the Delhi High Court.
"Further, all business decisions/practices referred in the FIR were based on collective decisions involving all relevant senior management personnel and the headquarters. We have all the documentary evidences to prove the above. We are confident that truth and justice will prevail," the statement added.
First Published: Thursday, May 24, 2012, 00:17