Subhinder Singh Prem, Adidas Group India’s former managing director, is likely to file a defamation suit against the German parent and Shahin Padath, director of finance at Reebok India.
The move came after details of the first information report (FIR) filed by Reebok India with the Gurgaon police against Prem and former chief operating officer Vishnu Bhagat became public.
In the FIR, the company said during internal investigation it found that the duo was operating four secret warehouses in Delhi, where all the goods diverted from the company used to be kept. The internal investigation was conducted by Padath, Claus Heckerott, who has replaced Prem as Adidas Group’s MD in India, and private firm Control Risks, which visited these four warehouses on March 30 and 31, 2012.
Padath in the FIR alleged Prem and Bhagat had generated fictitious sales over numerous financial years, which were diverted to these warehouses. This had resulted in a loss of Rs 870 crore to the company. Adidas Group said in a statement, “We are given to understand that our criminal complaint has been registered for investigation by the Indian law enforcement authorities. Please understand that we cannot provide any further details since the matter now rests with the Indian law enforcement authorities. We shall continue to cooperate with the authorities in their investigation of the matter.”
Meanwhile, Prem and Bhagat said in a joint statement, “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 at us because we acted as whistle-blowers on various fraudulent as well as illegal activities being carried out by the Adidas management people. This is also in retaliation to our recovery suits, which we 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 Gurgaon police, in the interim, have decided to seek the help of chartered accountants to thoroughly study the books of accounts to ascertain the modus operandi of Prem and Bhagat.
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Though the company registered its case at a local police station in sector-40 at Gurgaon, senior police officials have decided to form a special investigating team headed by a deputy commissioner of police. The team has an assistant commissioner of police and three inspectors of the economic offence wing as members.
“The Gurgaon police commissioner has given clear orders that we should take the help of chartered accountants to help in the investigations, since police officials lack the required expertise to study the books of accounts,” said a senior police official part of the investigation. Police officials said they had asked the company to give documentary evidence against Prem and Bhagat.