ED Arrests 4 Vivo India Execs As Part Of Money Laundering Probe

ED Raids 44 Locations In Alleged Money Laundering Probe Against Vivo

SUMMARY

The ED conducted raids at the premises of Vivo India and 23 other associate companies

The investigative agency began a probe into the Chinese smartphone maker in February 2022

After an investigation, the ED alleged that the Chinese smartphone maker transferred INR 62,476 Cr out of India to avoid tax payments in the country

The Enforcement Directorate (ED) on Tuesday (October 10) arrested four executives of Chinese smartphone maker Vivo India, including a Chinese national, in the ongoing probe against the company for alleged violations of the Prevention of Money Laundering Act (PMLA).

The raids were conducted at the premises of Vivo India and 23 other associate companies, CNBC-TV18 reported.

The investigative agency started a probe into the Chinese smartphone maker in February 2022, alleging that Vivo India had been allegedly escaping its tax liability by making remittances to foreign entities.

While the smartphone maker denied all allegations, the ED searched 48 locations of Vivo India and its associated companies in July last year for alleged tax evasion and money laundering.

After an investigation, the investigative agency alleged that the Chinese smartphone maker transferred INR 62,476 Cr out of India to avoid tax payments in India. The number represents nearly half of INR 1.25 Lakh Cr Vivo recorded in sales in India in FY22.

The ED also alleged that the Chinese smartphone maker laundered money to destabilise India’s financial system, going so far as to call it an act of ‘financial terrorism’.

A long standoff ensued between the ED and Vivo India, as the latter requested the Delhi High Court to unfreeze its bank accounts so it could pay the nearly 9,000 employees it had on payroll in India at the time.

While the High Court gave the company some respite, it did not do so without first asking it to deposit a bank guarantee of INR 950 Cr, maintain a bank balance of INR 250 Cr and submit all remittance details to the ED.

At the time, China also responded to the ED’s action on Vivo India, stating that the frequent investigation by India was damaging the goodwill of the companies in question. Apart from VIVO, many Chinese companies, including the likes of Huawei, OPPO and Xiaomi are also on the radar of various Indian investigative agencies on allegations such as tax evasion, money laundering and so on.