Ex-Reebok MD to move HC after district court rejects bail

Sources said that they would move the Chandigarh HC by the end of the week.

Reebok's parent company Adidas had accused Prem and Vishnu Bhagat [former Reebok India COO] of a Rs 870 crore fraud. Adidas had alleged that both Prem and Bhagat stole and diverted the company's products and kept them in four secret warehouses though Adidas has nine warehouses of its own. A police official said Prem is likely to be arrested soon. The state head quarters of the Gurgaon Police has issued a lookout circular for him.

"Our criminal complaint has been registered for investigation by the Indian law enforcement authorities," Adidas said on Wednesday, without giving further details.

Adidas said in March that the two men had left the company.

The alleged fraud would be the most high-profile corporate scandal in India since 2009 when Satyam Computer's former chairman and founder Ramalinga Raju revealed that the company had overstated profits and falsified assets for years.

According to local media reports, the company alleged that the two former officials stole products, set up secret warehouses, fudged accounts and engaged in fictitious sales for several years.

The reports also said Reebok alleged that the two officials ran an unauthorised franchise referral programme and money was collected on the pretext of opening new stores against instructions from Adidas.

Earlier this month, Adidas, the world's second-largest sporting goods company, said it will cut the number of Reebok stores in India by one-third as it was tackling "financial irregularities" at Reebok's Indian operations.

Adidas bought US rival Reebok in August 2005 for USD 3.8 billion but their Indian operations were merged only in 2011.

(With inputs from Reuters)