ED Raids 44 Locations In Alleged Money Laundering Probe Against Vivo

 

The Enforcement Directorate (ED) conducted searches at 44 locations across the country on Tuesday in an investigation related to alleged money laundering by Chinese smartphone maker Vivo and related companies.

According to a PTI report, the searches were being carried out under sections of the Prevention of Money Laundering Act (PMLA) across several states, including Delhi, Uttar Pradesh, Meghalaya and Maharashtra, among others.

The ED had filed a money laundering case after taking cognisance of a recent FIR filed by the Delhi Police’s economic offences wing against a distributor of Vivo based in Jammu and Kashmir. In the FIR, it was alleged that a few Chinese shareholders in the company forged their identification documents.

The ED suspects that the alleged forgery was done to launder illegal funds using shell companies. It also suspects that the said ‘proceeds’ of crime were diverted abroad or invested in other companies by circumventing Indian tax and enforcement agencies.

While Vivo previously declined to comment on Inc42’s queries on the matter, it later issued an official statement.

In a written statement given to Inc42, Vivo India’s spokesperson said, “Vivo is cooperating with the authorities to provide them with all required information. As a responsible corporate, we are committed to be fully compliant with laws.”

The government has been recently cracking down on Chinese entities, especially original equipment manufacturers (OEMs), for various violations of laws.

Last month, a probe into an India-based entity of Chinese ecommerce giant Alibaba by the Ministry of Corporate Affairs (MCA) revealed that some of the documents filed by Alibaba Cloud (India) LLP with the regulators were ‘false or fabricated’.

The probe was initiated after the Registrar of Companies (RoC) filed a complaint with the Mumbai Police. Besides Alibaba India, the Corporate Affairs Ministry investigated more than 700 companies.

Chinese OEMs Under Government Scrutiny

Apart from Vivo, the government has also taken action against the likes of Huawei and Xiaomi which operate in similar verticals.

Chinese phonemaker Xiaomi, which has become the biggest smartphone seller in the country, has attracted a lot of attention from Indian authorities.

Xiaomi India faced ED’s wrath in April 2022 when the agency seized accounts holding INR 5,551.27 Cr. The ED had alleged a breach of the provisions of the Foreign Exchange Management Act (FEMA), 1999. 

While the Karnataka High Court freed up the funds, Xiaomi officials alleged that its executives faced threats of ‘physical violence’ and coercion during questioning by the ED.

Xiaomi India sold the most smartphones in the country in India in Q1 2022 with around 8 Mn units, according to a BGR report. It left the likes of Samsung (6.9 Mn), Realme (6 Mn) and Vivo (5.7 Mn) behind.

Huawei has been struggling ever since the US imposed sanctions on it, which basically ended its smartphone business. The company’s telecom business has also taken a hit in India on its ties with the Chinese government, with the Indian government leaving out Huawei and ZTE from 5G trials. However, the government did include Huawei in a working group for the 5G rollout.

The company’s India CEO Li Xiongwei was summoned by a Delhi court, along with three other executives, after the Income Tax (I-T) department filed a complaint in May. Huawei’s offices were also raided in February this year by the I-T department on allegations of tax evasion.

The Indian government has already banned more than 250 Chinese apps from operating in India citing security concerns.

Update | July 5, 2022, 5:20 PM

The story has been updated to reflect Vivo’s statement.