ED arrests Chinese national, three others in Vivo money-laundering case
The Enforcement Directorate claimed that the accused entered India in a ‘disguised and fraudulent manner to set up an elaborate Chinese-controlled network’.
The Enforcement Directorate on Tuesday arrested four persons, including one Chinese national, in connection with a money-laundering investigation against Chinese smartphone manufacturer Vivo, reported The Indian Express.
Those arrested have been identified as Hari Om Rai, the managing director of Lava International mobile company, Chinese national Andrew Kuang and chartered accountants Nitin Garg and Rajan Malik.
Additional Sessions Judge Devender Kumar Jangala sent all of them to the Enforcement Directorate’s custody for three days.
The central agency started the investigation against Vivo under the Prevention of Money Laundering Act in July last year.
It was alleged that some Chinese shareholders of the company had forged their identity documents to launder illegally generated funds using shell or paper companies.
The investigation since has revealed that the four accused had used forged documents to open bank accounts. The central agency claimed that Rai and Lava provided the initial funding of Rs 3.17 crore for setting up the official and residential accommodation for Chinese nationals employed by Vivo India, the Indian subsidiary of Vivo, reported CNBC-TV18.
However, Vivo and Lava did not sign any agreement for the transfer of these funds. As per the Enforcement Directorate, this indicates Rai’s involvement in aiding Vivo and its Chinese owner in establishing a substantial presence in India.
It stated in its remand application that the accused had entered 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”.
The central agency conducted a series of raids at 48 locations belonging to Vivo India and its 23 other associated companies last year on the basis of a complaint by the Ministry of Corporate Affairs.
Following that, it stated that Vivo India had illegally transferred Rs 62,476 crore, which was almost 50% of its total sales proceeds, to China. It claimed that the amount was remitted to Beijing to show that the smartphone manufacturer had incurred losses to avoid paying taxes.
The case report alleged that Grand Prospect International Communication Private Limited, a company associated with Vivo India, and its shareholders had used forged identification documents and false addresses at the time when the firm was incorporated in December 2014 by Chinese citizens Zhengshen Ou, Bin Lou and Zhang Jie with the help of Nitin Garg.
“The allegations were found to be true as the investigation revealed that the addresses mentioned by the directors of GPICPL did not belong to them, but in fact it was a government building and house of a senior bureaucrat,” a statement read.
It said that the investigation showed that Bin Lou, the former director of Vivo, is also the director of Grand Prospect International Communication. The agency said that he had incorporated 18 companies in India between 2014 and 2015. Four other companies were incorporated by another Chinese citizen Zhixin Wei.
The 22 companies along with Grand Prospect International Communication had transferred the funds to Vivo India, which then remitted it to China.