ED Makes 3 Arrests In Money Laundering Case Against Vivo-India, Others

The Enforcement Directorate (ED) has taken three people into custody in connection with the money laundering probe against Chinese smartphone maker Vivo and some others, PTI reported, quoting official sources. The federal agency registered the arrest under the provisions of the Prevention of Money Laundering Act (PMLA), they said.

The identities of the three people have not been disclosed yet.

The ED had earlier arrested Lava International’s MD Hari Om Rai, Chinese national Guangwen alias Andrew Kuang, and chartered accountants Nitin Garg and Rajan Malik. They are being held in judicial custody at present.

A charge sheet had been filed against these people before a special PMLA court in Delhi, and the court took cognizance recently, according to PTI.

The Enforcement Directorate (ED) accuses Chinese phone manufacturer Vivo of illegally transferring 100 billion rupees out of India between 2014 and 2021 and 624.76 billion rupees to China in order to evade taxes in India. They used shell companies to transfer the funds.

ED, in light of raids conducted at the Vivo office and linked persons” office premises, accused the Chinese manufacturers of establishing 19 shell companies in order to syphon off “huge sums out of India.”.

The shell companies, led by Chinese nationals, controlled the complete supply chains of Vivo Mobiles in India, facilitating themselves to syphon a large chunk of the Vivo revenue.

In its remand application filed in October, the ED alleged that the accused had cheated the government by entering India in a “disguised and fraudulent manner to set up an elaborate Chinese-controlled network throughout the country… carrying out activities prejudicial to the economic sovereignty of India.”

ED accused Vivo of violating FDI norms from 2014 to 2018, as under the consolidated FDI Policy 2020, the Indian government allows investments under the ‘automatic route’. For that, no prior permission is required, and it needs minimal monitoring. Sectors like agriculture, manufacturing, airports, e-commerce, pharmaceuticals, and railway infrastructure, among others, allow 100 percent FDI.

Taking advantage of this rule, Vivo sent a huge sum of money by using shell companies, which helped them conceal their ownership.