German sportswear giant Adidas is suing two former senior officers of its Indian operation over what it believes to be significant corporate fraud.
According to the Times, Adidas has sought the help of Control Risks, an investigations specialist, to build a case against the two men who are alleged to have used a network of secret warehouses to siphon off Adidas footwear and clothing that had been fraudulently booked as sales.
The two men, Subhinder Singh Prem and Vishnu Bhagat, the former managing director and chief operating officer of Adidas India, are said to have been denied bail by a court in Gurgaon, near Delhi, on Saturday.
They are both facing criminal charges for their alleged role in an 8.7bn rupee (£100m) fraud against Adidas.
Adidas launched an internal company investigation in January after concerns regarding financial and stock irregularities at its Indian operation.
As a result of this investigation the company has now accused the men of stealing products, diverting them from the Adidas supply chain and storing them in warehouses in Delhi.
The pair are also suspected of trying to artificially boost sales in order to benefit from a company incentive scheme.
The company also claims that the pair collected money “fraudulently” from potential franchise partners on the pretext of opening new branches.
Both men, who were dismissed by Adidas in March, deny the accusations. Adidas has now appointed two German executives to take control of its India division.
Adidas also announced plans to shut down around 300 of its 900 Reebok stores in India as part of a restructuring plan.