ED arrests 3 more Vivo India executives in money laundering case

The Enforcement Directorate has arrested three Vivo India executives in connection with its money laundering probe against the Chinese smartphone maker and some other entities, official sources said today, 23 December.

Interim CEO of Vivo India Hong Xuquan, alias Terry, a Chinese national; chief financial officer (CFO) Harinder Dahiya; and consultant Hemant Munjal have been taken into custody under the provisions of the Prevention of Money Laundering Act (PMLA), the ED said.

They were presented before a court, which has sent them to ED custody for three days, the sources added.

An email sent by PTI to a company spokesperson, seeking comments on the development, remained unanswered.

The Enforcement Directorate 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 same case. They are in judicial custody at present.

The federal agency had filed a chargesheet against these four and vivo-India before a special PMLA court in Delhi. The court recently took cognisance of the chargesheet.

Special judge Kiran Gupta has summoned the accused on February 19.

The ED had claimed in its court papers for the earlier four arrestees that their alleged activities enabled Vivo India to make wrongful gains that were detrimental to the economic sovereignty of India.

It had raided Vivo India and persons linked to the company in July 2022, 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 said at the time that 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 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 had told the court.

The probe agency had filed an enforcement case information report (ECIR), the ED's equivalent of a police FIR, on 3 February 2023 based on 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.

The crackdown on the leading Chinese smartphone company came after the 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 they were also allegedly helped by CA Nitin Garg. The 23 companies were found to have transferred huge amounts of funds to Vivo India, the ED said.

"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 claimed.

Vivo Mobiles Pvt Ltd was incorporated on 1 August 2014 as a subsidiary of Multi Accord Ltd, a Hong Kong-based company. Out of its 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, the ED had alleged, mainly to China.

These remittances, the ED added, were made to "disclose huge losses in Indian incorporated companies to avoid payment of taxes in India".