Auditing regulator Institute of Chartered Accountants of India (ICAI) has started an inquiry against former CFO of Reebok India Vishnu Bhagat for the alleged multi-crore fraud at the Indian subsidiary of the sports goods major. ICAI is also looking into the role of the statutory auditor of Reebok at that time, the Delhi-based N Narasimhan & Co, to understand whether they had any hand or knowledge of the scam.

Subodh Agrawal, president of ICAI, said they have initiated a probe against Bhagat who was a "key managerial member" of the company. ICAI had already written to Bhagat on the matter and even served a show-cause notice to him seeking details about the alleged Rs 870 crore fraud. "We want to know what was his role, and want to understand his conduct in the whole affair."

Agrawal said the institute has so far decided not to initiate an inquiry against N Narasimhan & Co. "We have only written to them at the moment, and will look at an inquiry only when there are sufficient grounds for that." The government has ordered a probe by SFIO into the matter after an initial inquiry pointed out anomalies in the company's books following an inquiry by the Registrar of Companies, Delhi.

Reebok India had in May last year lodged an FIR with the Gurgaon Police, alleging that its former MD Subhinder Singh Prem and Bhagat had "stolen" products by setting up "secret warehouses", fudged accounts and indulged in fictitious sales to cause a huge financial dent to the company. Both Prem and Bhagat had denied the allegations.