INDIA: On Tuesday, the Enforcement Directorate (ED) arrested four executives of Chinese smartphone manufacturer Vivo, including a Chinese national, as part of an ongoing probe into suspected money laundering activities.
In addition, ED has reportedly also detained Hari Om Rai, the founder of Lava International, though the precise details of his involvement have not been divulged.
The action follows a sequence of raids carried out across India, encompassing 48 locations in the previous year. These raids included the offices of Vivo Mobiles India and 23 associated firms, including Grand Prospect International Communications (GPICPL).
The ED launched an investigation under the Prevention of Money Laundering Act (PMLA) on February 3, 2022, following an FIR filed by the Delhi Police. This FIR stemmed from a complaint lodged by the Ministry of Corporate Affairs, which alleged GPICPL’s involvement in fraudulent activities, cheating, and criminal conspiracy.
The ED alleges that several firms were established in India with the main intent of illegally channelling funds to China. Furthermore, the investigation discloses that Vivo Mobiles India purportedly sent a significant portion—roughly 50% of its sales earnings totalling Rs. 1.25 lakh crore—to China, allegedly to avoid taxes in India.
The company has consistently refuted the accusations. It previously asserted that it has cooperated with authorities by providing all necessary information and was “committed to be fully compliant with laws.”
Vivo, under the ownership of China’s BBK Electronics, is part of a group that also manages brands like Oppo and Realme within India. In the Indian smartphone market, Vivo holds the second-largest share with 17% of shipments, second only to Samsung, as per data from research firm Counterpoint.
In 2022, the ED froze 119 bank accounts associated with Vivo’s business in India. However, a subsequent court decision overturned this measure. In the case, the ED accused Vivo India of transferring 624 billion rupees (equivalent to $7.5 billion) to China illicitly to “disclose huge losses” in India and evade tax obligations.
Relations between India and China have deteriorated significantly following a 2020 military confrontation on their disputed Himalayan border that resulted in the deaths of 20 Indian soldiers and 4 Chinese soldiers.
Since then, India has intensified scrutiny of inbound investments from its neighbour and blocked hundreds of Chinese apps, including TikTok, claiming worries over national security.
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