ED arrests 3 more in money laundering case against Vivo-India, others

A charge-sheet was also filed by the Enforcement Directorate against these people recently before a special PMLA court in Delhi and the court took its cognisance recently.

New Delhi: The Enforcement Directorate has arrested three vivo-India executives in connection with its money laundering probe against the Chinese smartphone maker and some others, official sources said on Saturday.

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), they said.

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

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 case. They are in judicial custody at present.

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

Special Judge Kiran Gupta summoned the accused on February 19.

The ED had claimed in its court papers presented 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 its linked persons 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 said 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 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 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 address in Himachal Pradesh's Solan, Gujarat's Gandhinagar and in Jammu.

The crackdown on the leading Chinese company came after the federal probe agency 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 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 this country are 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 had 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 checks on Chinese entities that are allegedly indulging in serious financial crimes like money laundering and tax evasion while operating here.

These developments come amid a military stand-off between the two countries along the Line of Actual Control (LAC) in eastern Ladakh that began more than three years ago.