reebok scam 2012 fraud
DESCRIPTION
reebok scam 2012TRANSCRIPT
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MADE BY KARAN KUKREJA
22/014
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COMPANY PROFILE
Founded in England in 1895 as J.W.
Foster and Sons, a manufacturer of track
shoes
Renamed Reebok in 1958.
North American distribution rights
purchased by Paul Fireman in 1979.
Fireman and a few investors bought the
parent company in 1984.
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PRODUCT LINE
The product line of a Reebok retail outlet generally consists of sports accessories. The product line is divided into four sections:
1) Shoes
2) Apparels
3) Sports equipment
4) Exercising / health products
5) Personal grooming.
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TYPES OF RETAILERS
This Reebok showroom is a specialty store and is a franchisee organization. The products are basically shoes , apparels, sports equipment, health products etc. The horizon of products is very limited, that is, there are only a few types of product.
According to the need of customers, specialty stores are further divided into
1. Single-line stores,
2. Limited-line stores and
3. Super- speciality stores
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Related Facts
40 Main Footwear Factories in 8 Countries
600 Apparel Factories in 29 Countries
450 Raw Material Suppliers
27 Freight Forwarders
• Transportation modes include Ship, Truck, Rail and Air
34 Custom Brokers
Over 5,000 purchase orders placed each month
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REEBOK SCAM 2012
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REEBOK SCAM
Reebok India has alleged a Rs.870 crore fraud
by its former Managing Director
Subhinder Singh Prem and former Chief
Operating Officer Vishnu Bhagat.
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Scam came to light in March 2012.
The company's financial director, Shahim
Padath on internal investigation, lodged a
formal complaint against the duo on May 21
at Gurgaon Police station.
Charges by Adidas
-Fudging company a/cs
-Operating secret warehouses
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KPMG scanned over 50,000 emails from
1992 under a secret investigation named
“Project Diamond”.
A report was submitted in June 2011,
Probe found that Singh’s expenses were
more than his income.
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REPORTS OF KPMG
EMI of Prem Rs 10.79 Lakhs more than his
monthly take home pay of Rs 9.15 lakhs.
• He said he had nine real estate properties in
Delhi/NCR
• KPMG found 3 more properties in his name
which he claimed were jointly owned with
family
COO Vishnu Bhagat had alleged links with
franchisees.
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The duo had allegedly rented four warehouses without informing their seniors
and used them to store goods and claimed they were supplied to genuine dealers.
They also reportedly siphoned off goods to
ghost companies and distributors across the country, claiming they were defective pieces.
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FIR FILED IN GURGAON
POLICE STATION Irregularities include
over-invoicing to the tune of Rs 147 crore
Running a false franchisee referral
programme, receipts from which were about
Rs 114 crore
Maintaining four secret warehouses where
company goods were diverted, all of which
have been sealed and goods confiscated
Raising fake invoices of about Rs 98 crore to
show higher sales and claim promotions,
bonus and incentives
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Mismanagement led to Reebok scam:
Probe teams
Agencies probing the corporate fraud in the
operations of Reebok India have detected a
systemic “mismanagement” in the business
planning and running of the company, allegedly
done by some of its officials and employees.
The three agencies — the income tax (I-T)
department under the finance ministry, the Serious
Fraud Investigation Office (SFIO) under the
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.
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The governance and operations in the company
were mismanaged. The bills were inflated and not
recorded correctly.
Gurgaon police had arrested Singh and Bhagat
along with three others—Sanjay Mishra, Prashant
Bhatnagar and Surakshit Bhat.
Singh and Bhat were booked for fraud, criminal
conspiracy and other charges under IPC.
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IMPACT OF SCAM
Reebok sales declined 26 per cent on a
currency-neutral basis, largely as a
result of negative impacts from Reebok
India Company and the non-recurrence
of prior-year licence sales
Reebok brand’s revenue in the quarter
2011-2012 was at 336 million euro as
against 427 million euro in the year-
2010-2011.
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