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REEBOK (IND) SCAM 2012
BY…RAGHAV JHA
RAGHAVJHA45@GMAIL.COM(8010969972)
COMPANY PROFILE
 Founded in England in 1895 named J.W. Foster
and Sons .
 Manufacturer of track shoes
 Renamed Reebok in 1958
 Started it operations in India in 1996.
 Become a subsidiary of German group ‘Adidas’ in
2005.
RAGHAVJHA45@GMAIL.COM(8010969972
)
PRODUCT LINE…
 The product line was divided in to 5 sections..
 SHOES
 APPARELS
 SPORTS EQUIPMENT
 PERSONAL GROOMING
 HEALTH PRODUCT / EXERCISING
RAGHAVJHA45@GMAIL.COM(8010969972
)
ABOUT THE FRAUD….
 Reebok India has alleged a fraud of Rs. 870 crore
 By its former Managing Director Mr. Subhinder
Singh Prem and former Chief operating officer
(COO) Mr. Vishnu Bhagat
 Scam came to known in 25st March 2012 by a
Forensic Audit .
RAGHAVJHA45@GMAIL.COM(8010969972
)
ABOUT THE FRAUD
 Irregularities made by them were :---
 Over- Invoicing to of Rs.147Crores to show higher
sales for meeting their annual targets .
 Running a false franchisee
 Maintaining four secret warehouses where
company goods has been diverted and sold
unofficially .
 Siphoned off goods to ghost companies and
distributes across the country claiming they were
defective pieces .
RAGHAVJHA45@GMAIL.COM(8010969972
)
ABOUT THE F.I.R
 On 21st may 2012 an F.I.R filed, in GURGAON police ,
After internal investigation by finance director Mr.
Shahin Padath .
 F.I.R. includes …..
 Raising fake invoices of Rs.98crore to show higher sales
and claim promotions, bonus, incentives and to
reconcile stock
 Running a false franchisee , receipts from which
amounts to Rs.114Crores
 Over invoicing to the tune of Rs. 147 Crore .
 Maintaining four secret ware houses
 Raised Finance from Banks by using fake invoices
RAGHAVJHA45@GMAIL.COM(8010969972
)
ABOUT THE F.I.R (FRAUDSTERS)
 Main Fraudsters—
 Managing Director Shubinder Singh Prem
 Chief Operating Officer Vishnu Bhagat
 9 other employees including associate Sanjeev
Mishra
RAGHAVJHA45@GMAIL.COM(8010969972
)
F.I.R. STATUS
 The Company in May 2012 informed to Ministry Of
Corporate about the fraud
 MCA has transferred the case to Serious Fraud
Investigation Office (SFIO), an wing of the ministry.
 On September 19 ,2012 companies M.D , COO and 11
other with whom the fraudulent transaction has been
carried out were arrested.
 Prem & Bhagat left company on 26 march 2012
 The court has granted bail for both of them on July
17,2013
RAGHAVJHA45@GMAIL.COM(8010969972
)
IMPACT OF SCAM
 Reebok sales decline by 26 %
 Reebok India revenue in the quarter 2011-12 was
336 million euro as against 427 million euro in the
year 2010-11 .
 Adidas, The parent of Reebok has written off an
amount of 200-million Euros for Indian Operations
in its books of accounts .
 Parent company decided to close their one-third
warehouse for reconstruction purpose
RAGHAVJHA45@GMAIL.COM(8010969972
)
REASONS OF SCAM………
 Conflict of interest
 Lack of accountability
 Fraud with government authority
 Mismanagement
RAGHAVJHA45@GMAIL.COM(8010969972
)
AFTER SCANDAL STRATEGY ……
 Only one M.D will head both Adidas and Reebok
 Reebok franchisees and distributer model changed
globally .
 After one year of silence company open 100 stores
 Out of which 50 new
 Renovation of old stores 50
RAGHAVJHA45@GMAIL.COM(8010969972
)
CURRENT STATUS …..
 The serious Fraud Investigation Office (SFIO) has
filled a case against KPMG India . For ire regulation
in audit .
 The Institute of Chartered Accountants of India has
also initiated disciplinary action against the COO
(Vishnu Bhagat) who was the member of the
institute.
RAGHAVJHA45@GMAIL.COM(8010969972
)
RAGHAVJHA45@GMAIL.COM(8010969972
)

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Reebook (ind) scandal 2012

  • 1. REEBOK (IND) SCAM 2012 BY…RAGHAV JHA RAGHAVJHA45@GMAIL.COM(8010969972)
  • 2. COMPANY PROFILE  Founded in England in 1895 named J.W. Foster and Sons .  Manufacturer of track shoes  Renamed Reebok in 1958  Started it operations in India in 1996.  Become a subsidiary of German group ‘Adidas’ in 2005. RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 3. PRODUCT LINE…  The product line was divided in to 5 sections..  SHOES  APPARELS  SPORTS EQUIPMENT  PERSONAL GROOMING  HEALTH PRODUCT / EXERCISING RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 4. ABOUT THE FRAUD….  Reebok India has alleged a fraud of Rs. 870 crore  By its former Managing Director Mr. Subhinder Singh Prem and former Chief operating officer (COO) Mr. Vishnu Bhagat  Scam came to known in 25st March 2012 by a Forensic Audit . RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 5. ABOUT THE FRAUD  Irregularities made by them were :---  Over- Invoicing to of Rs.147Crores to show higher sales for meeting their annual targets .  Running a false franchisee  Maintaining four secret warehouses where company goods has been diverted and sold unofficially .  Siphoned off goods to ghost companies and distributes across the country claiming they were defective pieces . RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 6. ABOUT THE F.I.R  On 21st may 2012 an F.I.R filed, in GURGAON police , After internal investigation by finance director Mr. Shahin Padath .  F.I.R. includes …..  Raising fake invoices of Rs.98crore to show higher sales and claim promotions, bonus, incentives and to reconcile stock  Running a false franchisee , receipts from which amounts to Rs.114Crores  Over invoicing to the tune of Rs. 147 Crore .  Maintaining four secret ware houses  Raised Finance from Banks by using fake invoices RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 7. ABOUT THE F.I.R (FRAUDSTERS)  Main Fraudsters—  Managing Director Shubinder Singh Prem  Chief Operating Officer Vishnu Bhagat  9 other employees including associate Sanjeev Mishra RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 8. F.I.R. STATUS  The Company in May 2012 informed to Ministry Of Corporate about the fraud  MCA has transferred the case to Serious Fraud Investigation Office (SFIO), an wing of the ministry.  On September 19 ,2012 companies M.D , COO and 11 other with whom the fraudulent transaction has been carried out were arrested.  Prem & Bhagat left company on 26 march 2012  The court has granted bail for both of them on July 17,2013 RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 9. IMPACT OF SCAM  Reebok sales decline by 26 %  Reebok India revenue in the quarter 2011-12 was 336 million euro as against 427 million euro in the year 2010-11 .  Adidas, The parent of Reebok has written off an amount of 200-million Euros for Indian Operations in its books of accounts .  Parent company decided to close their one-third warehouse for reconstruction purpose RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 10. REASONS OF SCAM………  Conflict of interest  Lack of accountability  Fraud with government authority  Mismanagement RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 11. AFTER SCANDAL STRATEGY ……  Only one M.D will head both Adidas and Reebok  Reebok franchisees and distributer model changed globally .  After one year of silence company open 100 stores  Out of which 50 new  Renovation of old stores 50 RAGHAVJHA45@GMAIL.COM(8010969972 )
  • 12. CURRENT STATUS …..  The serious Fraud Investigation Office (SFIO) has filled a case against KPMG India . For ire regulation in audit .  The Institute of Chartered Accountants of India has also initiated disciplinary action against the COO (Vishnu Bhagat) who was the member of the institute. RAGHAVJHA45@GMAIL.COM(8010969972 )