SUMMARY
ED alleged that Vivo India laundered money to destabilise India’s financial system, calling the alleged laundering an act of ‘financial terrorism’
Vivo India said that the remittances have a ‘legitimate basis’ and were not done to avoid paying taxes in India
Vivo India called the account freezing “illegal, without jurisdiction and bad in law”
Vivo India has denied being involved in any money laundering and refuted the financial terrorism charge slapped on it by the Enforcement Directorate (ED) in the Delhi High Court.
Recently, the ED alleged that Vivo India laundered money to destabilise India’s financial system, going so far as to call it an act of ‘financial terrorism’.
The Chinese phonemaker said in an affidavit that was seen by ET that it has instead “contributed greatly towards the financial integrity and economic stability” of India.
In an affidavit submitted by Vivo India to Delhi High Court, the company said that the remittances have a “legitimate basis and were towards the procurement of raw material and other services required for the mobile manufacturing business of the company” and were not done to avoid paying taxes in India.
According to the affidavit, Vivo India said that it procures and imports certain components and raw materials from China for manufacturing its products in India and has to remit payments to its suppliers. Vivo said that it imports motherboards, semiconductors, printed circuit boards and sensors from China.
Further, it added that it is constructing a new manufacturing unit in India and for that, it procured services related to consultancy, market research, architecture and R&D from China. Vivo added that it also paid the requisite custom duties for imports from China and other countries.
“Illegal, Without Jurisdiction And Bad In Law”
Adding details about ED’s raids at almost 50 of Vivo India’s locations across the country on July 5, the company said that the ED seized data and documents belonging to the company during its search.
Stating the nature of the documents, Vivo India’s affidavit read, “These include the underlying documentation for all the company’s transactions, including the transactions with respect to China.”
Vivo also noted that ED seized its accounts, which put the livelihoods of its 9,000 employees and its investments in Uttar Pradesh worth INR 6,090 Cr in jeopardy. The Chinese OEM said that it has been unable to use its legitimate funds and its business operations are moving towards a ‘certain civil and commercial death’.
As such, Vivo India called the account freezing “illegal, without jurisdiction and bad in law”, stating that ED has “failed to comply with requirements of the Prevention of Money Laundering Act (PMLA)”.
The company alleged that the “ED has abused its powers and acted without jurisdiction. ED has acted capriciously, illegally and without jurisdiction”.
Vivo added that its bank account details were available in the public domain and ED’s freezing of its accounts was ‘excessive’. It argued that its bank accounts can’t be termed as proceeds of crime.
To add some context, ED had filed an affidavit in the high court, stating that the alleged money laundering was done to destabilise the financial system of the country and to threaten the integrity and sovereignty of the nation.
ED also cited an Odisha High Court judgement of 2020 that described money laundering as an act of ‘financial terrorism’. However, Vivo India argued that the citation was a ‘misplaced attempt’ to create an atmosphere of suspicion around the country.
Vivo India attracted the attention of the ED back in March when the Ministry of Corporate Affairs recommended an investigation into the company. Subsequent raids and investigation into Vivo India revealed that it had put INR 62,476 Cr down as remittances, or almost half of its total income of INR 1,25,185 Cr in India.
The Delhi High Court allowed Vivo India to use its bank accounts on three conditions, which included a bank guarantee of INR 950 Cr, maintaining a bank balance of INR 250 Cr and submitting all remittance details to the ED. So far, Vivo India has furnished the bank guarantee and submitted it to ED, as the company’s counsel said in the court.
