ED claims that Vivo remitted INR 1.07 Lakh Cr outside India to the companies that were controlled by its Chinese parent
ED also said many employees of Vivo and its affiliate companies flouted visa norms by concealing their identities while seeking visas
The 32-page filing by the enforcement agency states that many Vivo employees breached rules by visiting the ‘sensitive’ areas of Jammu and Kashmir and Ladakh in contravention of visa conditions
Training guns at Vivo, the Enforcement Directorate (ED) has alleged that the Chinese smartphone maker violated visa norms and syphoned off INR 1.07 Lakh Cr ($12.87 Bn) out of India.
The disclosures were part of a court filing seen by Reuters. This comes days after the agency raided multiple premises and arrested four company executives, including a Chinese national, under the provision of the Prevention of Money Laundering Act, 2002.
Revising its previously estimated figure of INR 624 Cr, the ED has now claimed that Vivo remitted INR 1.07 Lakh Cr outside India to certain trading companies, which were controlled by its Chinese parent. Terming this the ‘masking layer’, the agency said that the remittances to proxy companies were made with the intention to escape government notice.
“While no profits were shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid… huge sums were syphoned off out of India,” the ED said.
Detailing another one of its charges, the agency said that many employees of Vivo and its affiliate companies flouted visa norms by concealing their identities while seeking visas. It said that 30 Chinese nationals entered India and worked as company employees but ‘never disclosed’ that Vivo was their employer on the visa application.
“Many employees of Vivo group companies worked in India without appropriate visas… They have concealed information regarding their employer in their visa applications and cheated the Indian embassy or missions in China,” the ED added.
The 32-page filing also states that many Vivo employees breached rules by visiting the ‘sensitive’ areas of Jammu and Kashmir and Ladakh in contravention of visa conditions. Local rules bar foreigners from entering certain areas of J&K and Ladakh unless they have a special permit from authorities.
Inc42 has reached out to Vivo for a comment. This story will be updated accordingly.
The current crackdown is part of nearly a two-year-long investigation into the Chinese smartphone maker, which commenced in February last year. At the heart of the matter are allegations that Vivo India was escaping its tax liability by making remittances to foreign entities.
After raids at several premises linked to the company in July last year and an ensuing probe, the directorate claimed that the smartphone maker transferred INR 62,476 Cr out of India to avoid tax payments in the country.
Afterwards, the agency even froze the company’s bank accounts but, after a legal tussle, the Delhi High Court offered some respite to the company. The HC allowed it to access the accounts on the condition of depositing a bank guarantee of INR 950 Cr, maintaining a bank balance of INR 250 Cr and submitting all remittance data to the ED.
Chinese companies have been on the radar of Indian authorities ever since geopolitical tensions erupted in 2020 in the aftermath of the Galwan clashes. In the ensuing tussle, the Centre banned hundreds of Chinese apps and tightened its noose around Chinese companies.
Apart from Vivo, other smartphone makers such as Huawei, OPPO and Xiaomi are also under the lens of various Indian investigative agencies over allegations ranging from tax evasion to money laundering.