Ex-MD Sues Adidas Over Fraud Charge

Ex-MD Sues Adidas Over Fraud Charge

Subhinder Singh Prem seeks . 15 crore in damages, says German co was fully in the loop

Subhinder Singh Prem, the former boss of Adidas in India, has sued his former employer for 15 crore in damages, in a dramatic escalation of hostilities between him and the German giant that have stirred up the usually sedate world of sporting goods MNCs. Prem suggested that Adidas, which earlier this week said unspecified “commercial irregularities” in its Indian operations had forced it to take a . 870-crore charge, was fully in the loop on how the company was run.

He said the company was not a one-man show and all its financials and accounts were approved by up to five layers of officials. The finance chief of the Indian operations for the past year was a person specially appointed by the Adidas Group and all business and expansion plans were vetted by Adidas’ headquarters. While Adidas refused to say more than its statement issued on Monday, Prem for the first time gave more details on the manner of his departure, confirming a widely held perception that he was fired and did not leave on his own. Prem said he was called to Arizona, US, on March 25 and after he had presented his annual business plan there, he was coerced into disengaging from the company and promised a severance package. Four days later, he received a mail saying his services were being terminated. “Despite repeated mails, Adidas did not offer any reason for sacking me,” he said, adding that three hours before Adidas issued the statement containing reference to the commercial irregularities in India, he got a mail from the company saying his services were being terminated due to “financial irregularities”. Prem was a Reebok veteran who became an Adidas employee after the German company bought Reebok in 2005.

Prem Claims He Exposed 3 Big Frauds

Prem, who was appointed the head of the combined entity’s Indian operations last year, denied being involved in any financial irregularity and said on the contrary he had exposed three major frauds at Adidas. “The biggest scam was the scavenger deal running into. 200 crore, where about . 20 crore was illegally made by senior officials,” Prem’s lawyers said in a legal notice to Adidas, its global CEO, board members and its various entities in India.

“However, the scam was brushed under the carpet because it related to Adidas and not Reebok, and the request to notify the fraud to the auditors at the year-end was turned down by the headquarters,” the notice added. The lawyers have also demanded from Adidas contractual dues of . 12.7 crore

Source: The Economic Times (Mumbai) Edition, 03.05.12