Incriminating documents and forensic data from electronic devices seized by ED sleuths during the raids
Odaclass, operated by Pigeon Education Technology, allegedly routed nearly INR 82 Cr to China under the guise of marketing expenses without any proof of availing such services
The Centre has cracked down on many Chinese companies operating in India, along with Indian entities with connections to the neighbouring country, over the last year or so
The Enforcement Directorate on Thursday (April 27) said it conducted search and seizure operations at Bengaluru-based edtech startup Odaclass, fully owned and controlled by Chinese nationals, for flouting foreign exchange norms.
“ED has conducted search and seizure action under the provisions of Foreign Exchange Management Act (FEMA) in the case of Pigeon Education Technology India Private Limited. The company is providing online education in the name of Odaclass,” the agency said in a tweet.
ED conducted raids at two premises linked to Odaclass’ parent company, as per the tweet. The searches were carried under relevant provisions of the Foreign Exchange Management Act (FEMA) for ‘illegally’ remitting funds to the tune of INR 82 Cr to China, PTI quoted the ED as saying in a statement.
Incriminating documents were seized during the course of the searches while forensic data from electronic devices was also captured by the ED sleuths. Further probe into the case is currently underway, the statement added.
The ED alleged that the edtech firm was part of a larger group consisting of a complex web of entities, with the controlling company based in Cayman Islands.
The agency alleged that the edtech platform was 100% owned by Chinese entities, with foreign national Liu Can and Indian citizen Vedant Hamirwasia acting as directors of the company.
Describing the modus operandi, the agency said that the ‘entire affairs’ of the company were controlled by Can from China and the Indian national was kept out of the loop of the operations. He followed all the directions of the Chinese nationals.
The edtech entity allegedly routed nearly INR 82 Cr to China under the guise of marketing expenses as per the directions of bosses based in the neighbouring country without any proof of availing such services. The ED also said that Can served as authorised signatory of all bank accounts linked to the edtech company. While these accounts were maintained in India, the same were being operated online through China.
Besides, the agency is also probing the role of three former directors of the edtech startup – Sushant Srivastava, Priyanka Khandelawal and Himanshu Garg – for their alleged involvement in the matter. The trio reportedly left the company last year.
Chinese Entities Under The Scanner
This is not the first time that Chinese entities operating in the country have come under the radar of the Indian government. Last month, the ED provisionally attached INR 106 Cr worth of movable assets belonging to several loan app operators with connections to Chinese entities and nationals. These digital loan sharks were allegedly involved in extortion and harassment of people who had availed loans through these apps.
Before that, the Ministry of Electronics and Information Technology (MeitY) blocked hundreds of betting and loan apps with alleged links to China in February this year. In November last year, searches were conducted at the residential and office premises linked to Indian fintech majors in a digital part-time job scam involving Chinese nationals.
Then, there have been cases involving smartphone manufacturers such as Xiaomi, Vivo and Oppo who have been in the dock for allegedly routing money to China under various pretexts in alleged contravention of FEMA and anti-money laundering norms. There have also been cases and raids involving entities from the neighbouring country in crypto scams and fake gaming platforms.
The emergence of these issues has led to the government tightening its noose around such foreign entity-controlled platforms. Realising that most of these firms were set up in connivance with locals, the Ministry of Corporate Affairs (MCA) was said to be closely scrutinising the directors and other key executives of Chinese companies incorporated in India.
Besides, the Centre also issued diktats to app marketplaces to ensure illegal lending apps weren’t listed on their platforms.
