On Thursday, 7th July 2022, the Enforcement Directorate (ED) said that smartphone maker Vivo “illegally” sent Rs 62,476 crore to China in order to avoid paying taxes on that money in India. ED claimed to have cracked a large money laundering scam involving Chinese companies and multiple Indian firms. This amount is about half of Vivo’s total revenue of Rs 1,25,185 crore. However, ED has not clarified the timeframe of these transactions.
The investigation agency discovered that four Chinese nationals, three of whom “left” India between the years 2018 and 2021, formed up to 23 business entities in India with the assistance of Chartered Accountant Nitin Garg. One of the foreigners, who went under the name of Bin Lou, was a former Vivo director who according to ED, departed India in April 2018. Zhengshen Ou and Zhang Jie fled the country in 2021.
Rs 62,476 crore has been “illegally” transferred by smartphone maker Vivo to China in order to avoid payment of taxes in India, the Enforcement Directorate said #Vivo #EnforcementDirectorate https://t.co/bBiqWicOEc
— News18.com (@news18dotcom) July 7, 2022
According to a report by News18, the ED said in a statement, “These 23 companies 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 percent of the turnover out of India, mainly to China. These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India.”
The action is being seen as a part of the government’s efforts to stop money laundering by Chinese companies and also to crack down on Indian agents who work for them. These companies are allegedly involved in major financial crimes like tax evasion and money laundering while operating here.
Earlier, on Tuesday, July 5, The Enforcement Directorate conducted raids at as many as 44 locations across the country linked to the Chinese mobile company Vivo. The searches were conducted in a money-laundering investigation against the Chinese smartphone manufacturing company. In May, the Indian units of ZTE Corp., a Chinese partially state-owned technology company, and Vivo Mobile Communications Co. had come under the scanner for alleged financial irregularities.
On Tuesday, July 5, Vivo said that as a responsible corporate, the company is committed to be fully compliant with the local laws. Sharing information about the raids, ED said, “We followed all due procedure as per the law during the raids conducted under the criminal sections of the Prevention of Money Laundering Act (PMLA). Employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and tried to abscond, and attempted to remove and hide digital devices which were retrieved by the search teams.”
After the raids, ED said, “We seized funds worth Rs 465 crore kept in 119 bank accounts by various entities involved in the case, Rs 73 lakh cash and 2 kg gold bars were also recovered.”
After reviewing a Delhi Police FIR (registered at Kalkaji police station) from December of last year against Grand Prospect International Communication Pvt Ltd (GPICPL) (a firm associated with Vivo India), its directors, shareholders, and some other professionals, the agency filed an Enforcement Case Information Report (ECIR), the ED equivalent of a police FIR, on February 3. The Ministry of Corporate Affairs filed a police report saying that during the company’s December 2014 registration, GPICPL and its shareholders used falsified addresses and forged identification papers.
ED said, “The allegations (made by the ministry) 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.” It said Vivo Mobiles Pvt Ltd was incorporated on August 1, 2014, as a subsidiary of Multi Accord Ltd, a Hong Kong-based company.
