Reebok probe will take 4-5 months: SFIO

The Serious Fraud Investigation Office (SFIO) would give a report in four to five months on its scrutiny of the controversial Reebok India case, allegedly involving Rs 870-crore fraud by two former employees.

The move comes in the wake of the Ministry of Corporate Affairs (MCA) saying that the company was not cooperating with the scrutiny of the alleged financial irregularities.

The investigative arm of the MCA feels the involvement of the alleged fraud goes much beyond Subhinder Singh Prem, former managing director and Vishnu Bhagat, former chief operating officer of the company.

"It is very difficult to believe that only two people allegedly were involved in such a fraud. It is also possible that some small-level officials were also involved," an SFIO official told Business Standard. "We have just started the investigation. It appears to be a complex case. We have to look into all details before arriving at a conclusion".

Adidas AG, the German parent company of Reebok, has accused the two former top executives of an alleged fraud.

The company had filed a First Information Report (FIR) with the Gurgaon police on May 21,

in which it had accused Prem and Bhagat of "criminal conspiracy" and "fraudulent" practices over a period of time. The lawyers of the two accused have categorically denied their clients are involved in any fraud.

The official said SFIO would question auditors and bankers involved in the case. The investigative arm also plans to question Prem and Bhagat.

The Registrar of Companies (RoC), also under the MCA, had carried out an inquiry after a complaint by an investor and the report was given to the ministry. However, referring the case to SFIO, Minister for Corporate Affairs Veerappa Moily, on Monday, said Reebok had not given some important documents sought during the inquiry.

"Our ministry made some discreet enquiries, along with the RoC. The company was non-cooperative and, therefore, we had referred the case to the SFIO," Moily said.

An SFIO official said it would collect the company's balance sheet from the RoC and would look into the audits.

Last week, a trial court in Gurgaon had denied anticipatory bail to Prem and Bhagat. The police have argued that after going through the documents collected during the investigation, they should get an opportunity to question the accused.