A Delhi court on Tuesday extended by two days the ED custody of three Vivo-India executives in a money laundering case against the Chinese smartphone maker and others. Additional Sessions Judge Aparna Swami extended the custody of Interim CEO of Vivo-India Hong Xuquan alias Terry, Chief Financial Officer (CFO) Harinder Dahiya and consultant Hemant Munjal on an application moved by the Enforcement Directorate.
The accused were produced before the court on the expiry of their three-day ED custody granted earlier. The ED sought their remand for five days, claiming they were required to be confronted with the other accused arrested in the case earlier.
China had said on Monday it will provide consular protection and assistance to the arrested employees working for smartphone maker Vivo in India and expressed its firm backing to the Chinese businesses in protecting their lawful rights and interests. The federal anti-money laundering agency had earlier arrested four people — mobile company Lava International’s MD Hari Om Rai, Chinese national Guangwen alias Andrew Kuang, and chartered accountants Nitin Garg and Rajan Malik — in the case.
They are in judicial custody at present. The ED had filed a charge sheet against the four in a special PMLA court in Delhi. The court recently took cognisance of the charge sheet.
The ED alleged in documents submitted to the court with regard to the four arrestees that their activities enabled Vivo-India to make wrongful gains that were detrimental to the economic sovereignty of India. It had raided Vivo-India and people linked to it in July last year and claimed to have busted a major money laundering racket involving Chinese nationals and multiple Indian companies.
The ED had then alleged that Rs 62,476 crore was ”illegally” transferred by Vivo-India to China to avoid payment of taxes in India. The company had, however, said it ”firmly adheres to its ethical principles and remains dedicated to legal compliance”.
Lava International’s Hari Om Rai had recently told a court that though his company and Vivo-India were in talks to launch a joint venture in India a decade ago, he had nothing to do with the Chinese firm or its representatives since 2014. ”He has not derived any monetary benefit nor has he engaged in any transaction with Vivo-India or any entity allegedly related to Vivo, let alone having been associated with any alleged proceeds of crime,” Rai’s lawyer Nitesh Rana had told the court.
The probe agency filed an enforcement case information report (ECIR), the ED’s equivalent of a police FIR, on February 3 after studying a December 2022 Delhi Police FIR against an associated company of Vivo-India, Grand Prospect International Communication Pvt. Ltd. (GPICPL), its directors, shareholders and some other professionals. The police complaint was filed by the Corporate Affairs Ministry alleging that GPICPL and its shareholders used ”forged” identification documents and ”falsified” addresses at the time of incorporation of the company in December 2014.
This company had its registered addresses in Himachal Pradesh’s Solan, Gujarat’s Gandhinagar and in Jammu. The crackdown on the leading Chinese company came after ED found that three Chinese nationals, all of whom left India between 2018 and 2021, and another person from that country incorporated 23 companies in India in which chartered accountant Nitin Garg allegedly assisted them.
”The allegations (made by the Corporate Affairs ministry) were found to be true as the investigation revealed that the addresses mentioned by the directors of GPICPL did not belong to them. In fact, it was a government building and the house of a senior bureaucrat,” the ED said. It said Vivo Mobiles Pvt. Ltd. was incorporated on August 1, 2014 as a subsidiary of Multi Accord Ltd., a Hong Kong-based company.
The 23 companies incorporated in India were found to have transferred huge amounts of funds to Vivo India. Further, out of the total sale proceeds of Rs 1,25,185 crore, Vivo India remitted Rs 62,476 crore or almost 50 per cent of the turnover out of India, mainly to China, the ED has alleged. These remittances, it added, were made to ”disclose huge losses in Indian incorporated companies to avoid payment of taxes in India”.
The action is seen as part of the Union government’s effort to tighten the screws on Chinese entities that are allegedly indulging in serious financial crimes like money laundering and tax evasion while operating here.
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