On Saturday (30th December), a Delhi court ordered the release of 3 employees of Chinese smartphone manufacturer Vivo, who were arrested by the Enforcement Directorate (ED) in connection to a money laundering case.
As per reports, the three arrested individuals include Vivo India’s Chief Executive Officer (CEO) Hong Xuquan, Chief Financial Officer (CFO) Harinder Dahiya and consultant Hemant Munjal.
They were arrested on 21st December this year by the ED and had been in custody for over a week. On Saturday (30th December), a Delhi court dubbed their arrest as ‘illegal and void’, adding that the Vivo employees were not produced before the court within 24 hours of arrest.
The court directed Hong Xuquan, Harinder Dahiya and Hemant Munjal to furnish personal bonds of ₹2 lakhs and ordered their release. The trio has been asked to not tamper with evidence, leave India without exclusive permission of the trial court and surrender their passports in the court.
The Enforcement Directorate, in its remand application, informed that the accused ViVo employees were working without legit visas and cheated the Union government by setting up an elaborate Chinese-controlled network in India to carry out prejudicial activities against the country’s sovereignty.
The Background of the Case
In October this year, the ED arrested four people in connection to the case. The arrested individuals include Hari Om Rai, the Managing Director of Lava International, a competing mobile company; Guangwen, also known as Andrew Kuang, a Chinese national; and two chartered accountants, Nitin Garg and Rajan Malik.
The ED’s investigation has brought to light allegations of a significant financial subterfuge orchestrated by Vivo. Reports suggest that the company siphoned off a staggering Rs 1 lakh crore from India between 2014 and 2021.
This was allegedly facilitated through a network of shell companies, purportedly established at the behest of Vivo’s Chinese parent company Vivo Mobile Communication Co. These shell entities, numbering 19, were set up to create an elaborate front, allowing Vivo to gain a stronghold in India violating foreign direct investment rules.
Further, the ED’s probe unearthed that Vivo India had remitted nearly Rs 62476 crore to China, constituting almost 50% of its turnover, ostensibly to avoid taxes in India. This has raised serious concerns about the economic sovereignty of India.
The agency’s investigation also revealed a pattern of alleged deceit involving the use of forged documents and falsified addresses. One of the companies under scrutiny, Grand Prospect International Communication Pvt. Ltd. (GPICPL), reportedly used government buildings and a senior bureaucrat’s house as its registered addresses.
The matter has drawn significant attention, considering the scale of the alleged financial irregularities and their implications on India’s economic interests. The case continues to unfold as the ED delves deeper into the intricate web of transactions and corporate structures set up by Vivo and its associates.