Accounting regulator Institute of Chartered Accountants of India (ICAI) has asked Reebok India’s auditor N Narasimhan & Co, and its former chief operating officer Vishnu Bhagat, one of the accused in the alleged Rs 870-crore fraud case, for various details such as whether the company has an internal auditor or a statutory one by June 13.

ICAI wrote a letter to the two on May 29, and asked them to reply within 14 days, failing which, it may take action against them.

“We have sought various details and clarifications from N Narasimhan & Co and Vishnu Bhagat. For instance, we have asked both of them to present their version or views on the allegations made in the Reebok fraud case. We have also sought clarification from the auditor as to whether it is an internal or a statutory auditor of the company,” ICAI President Jaydeep N Shah told Business Standard.

According to Shah, Bhagat is a chartered accountant and is registered with ICAI. 

Earlier, ICAI had also written to Reebok India, seeking inputs on the nature of the case immediately after the sports goods maker’s German parent Adidas AG lodged a complaint with the Gurgaon police, alleging a fraud involving Rs 870 crore in its Indian subsidiary.

“We wrote to Reebok India on May 23, almost immediately after the first information report (FIR), seeking details of the fraud reported by them. We have also asked for certain documents and clarifications into the case,” Shah said. “We are yet to receive any reply from the company”.

In the FIR, filed on May 21, Adidas AG accused the two former executives — Subhinder Singh Prem, former managing director and Vishnu 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.

Once ICAI receives replies from all sources, it will initiate a detailed investigation into the matter.

“Based on the information and replies, we will move ahead with our probe. We will try to correlate and find out if there is any professional negligence of any chartered accountant involved in the matter,” Shah said.

ICAI will proceed on a legal course only if it is convinced that there is wrongdoing on the part of the chartered accountants involved in the case.

According to Shah, ICAI may levy financial penalty and cancel licences of the auditor if found guilty.

While the Ministry of Corporate Affairs and its investigative arm, the Serious Fraud Investigation Office (SFIO), are of the view that the amount of the fraud – Rs 870 crore – as quoted by the company could be inflated, the accounting regulator said it was too early to arrive at a conclusion.

Shah said ICAI will share information and findings with other bodies investigating the case.

On May 29, the ministry had referred the Reebok case to SFIO, stating Reebok India was not cooperating in the investigation. Minister for Corporate Affairs Veerappa Moily had said Reebok had not given some important documents sought during the initial inquiry by his ministry.

The income tax department is also probing the case.