ED raids Chinese smartphone maker and ex-IPL cricket sponsor Vivo & its linked firms

The financial watchdog is reportedly investigating violations of the Prevention of Money Laundering Act

The financial watchdog is reportedly investigating violations of the Prevention of Money Laundering Act
The financial watchdog is reportedly investigating violations of the Prevention of Money Laundering Act

After Xiaomi, Vivo comes under the ED’s scanner

The Enforcement Directorate (ED) on Tuesday conducted a massive raid at more than 44 places across the country in a money-laundering investigation against Chinese smartphone manufacturer Vivo and related firms. The searches were carried out under sections of the Prevention of Money Laundering Act (PMLA) at locations in several states including Delhi, Uttar Pradesh, Bihar, Meghalaya, and Maharashtra. The leading Chinese mobile phone maker company, operating in India in a big way was IPL Cricket sponsor for 2021, even during the Indo-China border tussles.

The ED filed a money laundering case after taking cognizance of a recent Delhi Police (economic offences wing) FIR against a distributor of the agency based in Jammu and Kashmir where it was alleged that a few Chinese shareholders in that company forged their identity documents. The ED suspects this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime” were diverted to stay under the radar of Indian tax and enforcement agencies. Officials believe, like another Chinese mobile phone company Xiaomi, Vivo is also engaged in dubious practices to siphon money out of India through shell firms and claiming licensing arrangements with the head office in China.

The action is being seen as part of the Union government’s steps to tighten checks on Chinese entities and the continued crackdown on such firms and their linked Indian operatives that are allegedly indulging in serious financial crimes like money laundering and tax evasion while operating here. India’s Intelligence and Security agencies also doubted and monitored the activities of Chinese telecom companies like Huawei, ZTE, Xiaomi, Vivo, Oppo, etc.[1]

The ED in April ordered the seizure of Rs.5,551 crore worth of deposits of Chinese smartphone giant Xiaomi India for alleged contravention of the Foreign Exchange Management Act (FEMA). The Income-Tax Department raided Chinese telecom company Huawei in February and it claimed to found alleged manipulation of account books for reducing taxable income in India by the company.

Premises of a number of these Chinese smartphone companies including Xiaomi, Oppo, and Vivo, their distributors, and linked associates were raided across the country by the I-T department in December last year and it later claimed to have detected alleged unaccounted income worth over Rs.6,500 crore due to violation of the Indian tax law and regulations.

Vivo had a 15 percent market share in the Indian smartphone segment in the first quarter of 2022 with the shipment of 5.5 million devices.


[1] Espionage, profiling and economic control mark Chinese commercial companiesJun 06, 2022, ET

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