The Enforcement Directorate (ED) has arrested four people as part of its ongoing investigation against Chinese smartphone maker Vivo under the Prevention of Money Laundering Act (PMLA). The four people who have been taken under custody include a Chinese official Guangwen Kyang aka Andrew Kuang, Managing Director of Lava International Hari Om Rai, a Chartered Accountant Nitin Garg, and Rajan Malik.
In July last year, ED conducted raids at 48 locations against several companies related to Vivo and seized Rs 465 crore across 119 bank accounts which included FDs worth Rs 66 crore, two kgs of gold, and Rs 73 lakh cash.
It was alleged that the country’s money was being sent to China through these companies to avoid taxes.
Chinese smartphone maker Vivo Mobiles India Pvt Ltd was incorporated in August 2014 as a subsidiary of Multi Accord Ltd, which is a Hong Kong-based company.
Within four months, in December 2014, a company was incorporated in Shimla. This company had registered offices in Solan, Shimla in Himachal Pradesh, and Gandhinagar in Gujarat.
The company had three Chinese directors but it was incorporated by forged documents by an Indian chartered accountant. All three Chinese directors left India between 2018 and 2021.
Further into the matter, the Ministry of Corporate Affairs filed a criminal case with the Delhi Police.
The probe revealed that Chinese nationals had used forged documents and given the address proof which turned out to be of a government house and residence of a senior bureaucrat. A web of 18 companies was incorporated.
It was alleged that suspects had remitted over 60,000 crores out of the country or 50 per cent of total turnover to China.
The company’s alleged claim was that this was done to pay a “royalty commission” or because of huge “losses” to avoid payment of taxes.
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