The Indian Enforcement Directorate conducted searches at over 40 locations across the country in connection with a money laundering case registered against Chinese smartphone manufacturer Vivo on Tuesday.
According to sources, the searches were conducted at premises associated with Vivo and its dealers in Uttar Pradesh, Madhya Pradesh, Bihar, Jammu and Kashmir and a few southern states.
The ED case is based on an FIR filed by the Delhi Police Economic Offences Wing against a Vivo distributor in Jammu and Kashmir last month, in connection with alleged forgery of identity documents by two Chinese shareholders of the company. The ED suspects this alleged forgery was done to launder funds using shell companies,
“We have come across many shell companies being operated in India by the Chinese company. All these are being used to launder money,” said a senior ED official.
Vivo has released a statement by stating that, “Vivo is cooperating with the authorities to provide them with all required information. As a responsible corporate, we are committed to be fully compliant with laws.”
The Meerut police had registered a case of fraud against Vivo in 2020 as over 13,500 phones manufactured by the company were allegedly found to have the same IMEI (International Mobile Equipment Identity) number. To recap, the IMEI is a unique 15-digit code used to identify smartphones.
Meanwhile in 2017, the Telecom Regulatory Authority of India (TRAI) issued a notification directing all smartphone manufacturing companies to ensure a unique IMEI, warning of a three-year jail term in case of non-compliance.
Vivo is among the top five smartphone sellers in India by sales. At the end of the first quarter of 2022, it had a 15 per cent market share in the country. That puts Vivo at the fourth spot, behind Xiaomi, Samsung and Realme.
Vivo was the top 5G-enabled smartphone maker in the mid-segment (Rs10,000-Rs 20,000) in Q1 2022, owing to positive consumer response to its ‘T-Series’ line of smartphones.
This is the second big case that the ED has registered against a Chinese cellphone company. Earlier, it had booked Xiaomi, another Chinese cellphone manufacturer, for allegedly making illegal foreign remittances in violation of the Foreign Exchange Management Act (FEMA).
In April, the ED seized Rs 5,551.27 crore belonging to Xiaomi Technology India Private Limited under the provisions of FEMA. Xiaomi India is a wholly-owned subsidiary of the China-based Xiaomi group. According to ED, the seized amount was lying in the company’s bank accounts. Manu Kumar Jain, Xiaomi’s global vice-president, was questioned by the ED.
In a statement, the ED had said: “The company (Xiaomi) started its operations in India in the year 2014 and started remitting the money from the year 2015. The company has remitted foreign currency equivalent to INR 5,551.27 crore to three foreign-based entities, which include one Xiaomi group entity, in the guise of royalty. Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities. The amounts remitted to other two US-based unrelated entities were also for the ultimate benefit of the Xiaomi group entities.”
