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Police investigating $158M Reebok fraud

MUMBAI — Germany’s Adidas Group said Wednesday that Indian police are investigating two former executives from its Reebok India unit for an alleged fraud that could cost the company tens of millions of dollars.

Adidas spokesman Jan Runau said the executives under investigation are Shubhinder Singh Prem, former managing director, and Vishnu Bhagat, former chief operating officer. They both left Reebok India in March.

A police report says the pair filled four warehouses with stolen merchandise, falsifying bills and siphoning off goods to fake companies and distributors for years, local media reported. Mr. Prem has denied the allegations and is suing Reebok for damages, according to local media.

Reports of the financial impact of the alleged fraud varied widely. The Press Trust of India reported that the fraud resulted in a loss of $232 million, while the Times of India and the Hindustan Times pegged it at $1.6 billion.

Mr. Runau said those numbers were “pure speculation.”

He said the company stood by its April 30 disclosure that irregularities in the India business could cost up to $158 million, with related restructuring charges of up to $88 million.

NEW YORK

Stewart a non-executive chairman of company

NEW YORK — Martha Stewart was named as non-executive chairman of the lifestyle, media and merchandising company that she created Wednesday.

Ms. Stewart rejoined the board of Martha Stewart Living Omnimedia Inc. in September at the end of a five-year ban on serving as a board member or as an executive of a public company as part of a settlement with federal regulators related to insider trading.

“I look forward to working closely with our directors and our management team as we focus on the future, capitalizing on the strength of our brand and our amazing customer connection to continue building our business so that it realizes its full and considerable potential,” Ms. Stewart said.

Ms. Stewart was convicted in 2004 on federal criminal charges of lying to prosecutors about selling ImClone shares a day before the Food and Drug Administration announced it declined to review an ImClone application for a cancer drug. She served five months in prison.

In 2006, the Securities Exchange Commission agreed to settle a related civil case against Ms. Stewart. Under the agreement, Ms. Stewart agreed to pay about $58,000 as well as a civil penalty of about three times the loss she avoided, or about $137,000. She also agreed to a five-year ban from serving on the board or as an officer of a public company

Ms. Stewart succeeds Charles Koppelman as non-executive chairman.

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