Directors flee as Chinese mobile company Vivo is ambushed by enforcement directorate

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As part of the Center’s crackdown on Chinese entities, Indian financial watchdog Enforcement Directorate (ED) on Tuesday conducted searches of 44 sites across the country in an alleged money laundering investigation against Chinese smartphone manufacturing company Vivo and its affiliates.

The searches were conducted under sections of the Money Laundering Prevention Act (PMLA) at Vivo India’s offices in several states including Delhi, Uttar Pradesh, Meghalaya Maharashtra and others after a First Information Report (FIR) was issued. registered by the economic crimes. wing of the Delhi Police.

“We recently filed a money laundering case after becoming aware of an FIR by the Delhi Police (Economic Crimes Department) against a distributor of the agency in Jammu and Kashmir, alleging that a few Chinese shareholders in that company had lost their identity documents. had forged,” said an ED official.

The ED believes that this alleged counterfeiting was done to launder illegally generated funds using shell or paper companies. Furthermore, some of the illegal proceeds were diverted abroad or invested in other companies by evading Indian tax and enforcement authorities.

“We have come across many shell companies operated in India by the Chinese company. All of these are used to launder money,” a senior ED official said.

According to sources, Vivo’s directors Zhengshen Ou and Zhang probably fled India for fear of being investigated. The enforcement agency has so far received information about money laundering worth 10,000 crores during the raids, according to ED sources.

Meanwhile, the CBI (Central Bureau of Investigation) is already investigating this matter in India and has filed a separate Initial Information Report (FIR). Furthermore, the Income Tax Department (IT) and the Ministry of Corporate Affairs (MCA) closely monitor the Chinese manufacturing companies.

In a statement, a Vivo India spokesperson said: “Vivo is working with the authorities to provide them with all required information. As a responsible company, we are committed to fully complying with the laws.”

For the inexperienced, the heist on Vivo comes weeks after the ED seized 5,551.27 crores from Xiaomi Technology India Private Ltd in connection with the company’s illegal outgoing transfers. The chargeback was made from the company’s bank accounts under the provisions of the Foreign Exchange Management Act (FEMA).

According to Xiaomi, it had transferred 84% of the aforementioned amount as part of royalty payments, which were for the licensed technologies and IPs used in their Indian version products.

“The company (Xiaomi) started its business in India in the year 2014 and started transferring the money from the year 2015. The company transferred a foreign currency worth INR 5,551.27 crore to three foreign-based entities, including one Xiaomi group entity, under the guise of royalties,” the ED had said in a statement.

“Such huge amounts in the name of royalties were transferred on behalf of their Chinese parent group entities. The amounts transferred to other two US-based unrelated entities were also in the ultimate benefit of the Xiaomi group entities.”

Moreover, in December last year, the Indian IT department raided many buildings of several Chinese smartphone companies, including Xiaomi, Oppo and Vivo, their distributors and affiliated employees. They claimed to have identified an unaccounted income reportedly worth more than 6,500 crore due to violation of Indian tax law and regulations.

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