New Delhi, Sep 23: Agencies probing the alleged Rs 870 crore corporate fraud in the operation of Reebok India have detected a systemic “mismanagement” in the business planning and running of the company reportedly done by some of its officials and employees.
Three different agencies – the I-T department under Finance Ministry, the Serious Fraud Investigation Office (SFIO) under Corporate Affairs Ministry and the Economic Offences Wing of Gurgaon police – have recorded the findings almost four months after a criminal case was filed by Reebok India against two of its former employees.
“The governance and operations in the company were mismanaged. The bills were inflated and not recorded correctly. So, the probe clearly indicates that it was not a corporate scam in the apparel manufacturing firm but it was non-adherence to the rules and guidelines of business procedures in the firm,” sources privy to the probe said.
The guidelines under the Companies Act were violated which is suspected to have led to other contraventions like tax evasion, they said.
The I-T department which has indicated to an alleged Rs 140 crore tax evasion in the case, the sources said, will now work to ensure that the company, later, does not claim any “bad debt“.
A bad debt is that amount that is owed to a business or individual and has to be written off by the creditor as a loss because the debt cannot be collected because of a host of reasons.
“There were no serious borrowings or lendings of Reebok India. The probe agencies investigation will make sure that the firm does not qualify to claim bad debt from anywhere in the later course,” they said.
Probe agencies have also found that some of the officials of the company could have been involved in the inflation of bills and over-valuation of the goods of the firm.
In the much publicised criminal complaint filed at the Gurgaon police's Economic Offence Wing in May, Reebok India had alleged that its former Managing Director Subhinder Singh Prem and Chief Operating Officer Vishnu Bhagat were involved in an Rs 870-crore fraud by indulging in “criminal conspiracy” and “fraudulent” practises over a period of time.
Gurgaon police had some days back arrested Subhinder Singh and Vishnu Bhagat along with three others – Sanjay Mishra, Prashant Bhatnagar and Surakshit Bhat.
Subhinder Singh and Vishnu Bhagat were booked for fraud, criminal conspiracy and other charges under IPC for allegedly siphoning off the sportswear company's money by creating ghost distributors across the country and generating forged bills over the last five years.
While the I-T department is scrutinising documents related to accounts and imports of the firm, the SFIO is probing the entire governance affairs of the company under Section 235 of the Companies Act.
According to sources, the probe agencies also do not rule out the culpability of accounting officials of the firm at this stage for their “deliberate” or “mistaken oversight” in account books which led to the alleged financial irregularities.
