Adidas investigates allegations of embezzlement and bribery in China, according to news reports | DC News Now

HONG KONG (AP) — Sportswear maker Adidas has launched an investigation into allegations of “compliance violations” in China after receiving an anonymous letter earlier this month accusing local executives of embezzling “millions of euros,” according to news reports.

Adidas confirmed it received an anonymous letter on June 7 pointing out possible “compliance violations” in China, the Wall Street Journal and Bloomberg reported.

The shoe and sporting goods manufacturer said it was investigating the case together with an outside legal advisor, news agencies reported.

Chinese state media outlet Jiemian reported last week that an anonymous group of whistleblowers posing as Adidas China employees sent the letter containing the allegations to the company’s German headquarters.

The letter, published by Jiemian and also widely shared on social media, accuses senior executives and several employees of embezzling and accepting bribes in the form of cash and real estate from suppliers, as well as accepting kickbacks from celebrities and advertising agencies.

A senior employee was also accused of bullying in the workplace, such as insulting subordinates, and nepotism.

The informants stated that if Adidas did not respond to the issues raised in the letter, the matter would be passed on to external media and “legal departments.”

Adidas shares fell 1.73 percent on Tuesday.

Greater China, which includes mainland China, Hong Kong and Taiwan, accounts for 15% of Adidas’ revenue, according to its 2023 annual report.

The German brand is the second largest sportswear brand in China after Nike.

Adidas’ sales in Greater China rose 8% in 2023, following declines between 2019 and 2022 due to lockdowns caused by the COVID-19 pandemic and a backlash in China against Western brands that refuse to use Xinjiang cotton. Activists say cotton produced in Xinjiang is often linked to forced labor.

Adidas regularly engages well-known Chinese celebrities as brand ambassadors, including singer and actor Jackson Yee, well-known Chinese rapper Gali and Dilraba, a well-known Chinese singer of Uighur descent.