In its remand application, the ED had 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”.
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The Enforcement Directorate (ED) has said it has filed a chargesheet in its money laundering probe against Chinese phone maker Vivo and has slapped charges under the criminal sections of the Prevention of Money Laundering Act (PMLA). The ED has said that Vivo used shell companies to remit Rs 1 lakh crore outside India between 2014 and 2021.
In October, the ED had arrested Hari Om Rai, the MD of Lava International company, Chinese national Guangwen alias Andrew Kuang, and Chartered Accountants Nitin Garg and Rajan Malik in the case.
ED, which started its investigation in 2022, had raided Vivo-India and its linked persons in July last year, claiming to have busted a major money laundering racket involving Chinese nationals and multiple Indian companies.
In the charge sheet filed on Wednesday before a special court in Delhi, ED has named Rai, Guangwen Kyang alias Andrew Kuang, Garg and Malik for siphoning off “huge sums out of India”.
ED said it has found that the Chinese phone manufacturer had set up 19 more companies in various Indian cities after its entry in 2014. These companies had Chinese nationals as their directors and/or shareholders and controlled the complete supply chain of Vivo Mobiles in India.
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In its remand application filed in October, the ED had 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”.
Under the consolidated FDI Policy 2020, the Indian government allows investments under the ‘automatic route’. For that no prior permission is required and needs minimal monitoring. Sectors like agriculture, manufacturing, airports, e-commerce, pharmaceuticals, railway infrastructure, among others, allow 100 per cent FDI.
ED had alleged violations of FDI norms by Vivo from 2014 to 2018. It said that taking advantage of India’s FDI rules, Vivo “under the garb” of a wholesale cash and carry business concealed its ownership.
ED said the money laundering probe has revealed that Vivo remitted over Rs 1 lakh crore outside India since 2014 to some “trading companies” hired by it to create a layer so that the control of Vivo China over these Indian companies does not come to the notice of government authorities.
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ED noted that Vivo showed zero profits from 2014 to 2020 and no income taxes were paid in India.
The ED started the probe in 2022 following a complaint lodged by the Corporate Affairs Ministry alleging that GPICPL and its shareholders used “forged” identification documents and fake addresses at the time of its incorporation in 2014.
