The Enforcement Directorate has arrested four persons including the MD of the Lava International mobile company and a Chinese national as part of its ongoing money-laundering probe against Chinese smartphone-maker Vivo, official sources said on Tuesday.
They identified the four as Hari Om Rai, the MD of Lava International company, Chinese national Guangwen Kyang, Chartered Accountant Nitin Garg and a person called Rajan Malik.
They have been taken into custody under the provisions of the Prevention of Money Laundering Act (PMLA).
An e-mail sent to Lava International for its reaction did not elicit an immediate response. Lava International, a domestic mobile device manufacturing company, claims to have 1-2 per cent share in the smartphone market.
The agency had raided Vivo and its linked persons in July last year, claiming to have busted a major money laundering racket involving Chinese nationals and multiple Indian companies.
The ED had then alleged that a whopping Rs 62,476 crore was "illegally" transferred by Vivo to China in order to avoid payment of taxes in India.
The crackdown on the leading Chinese company came after the federal probe agency found that three Chinese nationals -- all of whom "left" India during 2018-21 --and another person from that country incorporated 23 companies in India in which they were also allegedly helped by CA Nitin Garg.
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 per cent of the turnover out of India, mainly to China, the ED had alleged.
These remittances, it added, were made in order to "disclose huge losses in Indian incorporated companies to avoid payment of taxes in India."
The action is seen as part of the Union government's effort to tighten checks on Chinese entities that are allegedly indulging in serious financial crimes like money laundering and tax evasion while operating here. It is also being seen as continued crackdown on such firms and their linked Indian operatives.
These developments also come even as the military stand-off between the two countries along the Line of Actual Control (LAC) in eastern Ladakh has been ongoing for more than three years now.
Vivo, post the ED searches of July 5, 2022, had said it was "a responsible corporate and was committed to be fully compliant with laws."
The agency said while it followed "all due procedures as per law" during the raids conducted under the criminal sections of the Prevention of Money Laundering Act (PMLA), it alleged "employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and tried to abscond, remove and hide digital devices which were retrieved by the search teams."
The ED also said that post the raids, it 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.
The agency filed an enforcement case information report (ECIR), the ED equivalent of a police FIR, on February 3 after studying a Delhi Police FIR (Kalkaji police station) of December last year against a associated company of Vivo, Grand Prospect International Communication Pvt Ltd (GPICPL), its directors, shareholders and some others professionals.
The police complaint was filed by the Corporate Affairs Ministry alleging that GPICPL and its shareholders used "forged" identification documents and "falsified" addresses at the time of incorporation of the company in December, 2014.
This company had its registered address in Solan (Himachal Pradesh), Gandhinagar (Gujarat) and Jammu (J&K). The three Chinese nationals, mentioned above, incorporated this company while a fourth one, Zhixin Wei, also opened four companies to carry out similar transactions.
"The allegations (made by the Corporate Affairs 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," the ED said.
It said Vivo Mobiles Pvt Ltd was incorporated on August 1, 2014 as a subsidiary of Multi Accord Ltd, a Hong Kong-based company.
The ED identified the other 22 companies as: Rui Chuang Technologies Pvt Ltd (Ahmedabad), V Dream Technology & Communication Pvt Ltd (Hyderabad), Regenvo Mobile Pvt Ltd (Lucknow), Fangs Technology Pvt Ltd (Chennai), Weiwo Communication Pvt Ltd (Bangalore), Bubugao Communication Pvt Ltd (Jaipur), Haicheng Mobile (India) Pvt Ltd (Delhi), Joinmay Mumbai Electronics Pvt. Ltd (Mumbai), Yingjia Communication Pvt Ltd (Kolkata) and Jie Lian Mobile India Pvt. Ltd. (Indore).
The rest are Vigour Mobile India Pvt Ltd (Gurugram), Hisoa Electronic Pvt Ltd (Pune), Haijin Trade India Pvt Ltd (Kochi), Rongsheng Mobile India Pvt Ltd (Guwahati), Morefun Communication Pvt Ltd (Patna), Aohua Mobile India Pvt Ltd (Raipur), Pioneer Mobile Pvt Ltd (Bhubaneswar), Unimay Electronic Pvt Ltd (Nagpur), Junwei Electronic Pvt Ltd (Aurangabad), Huijin Electronic India Pvt Ltd (Ranchi), MGM Sales Pvt Ltd (Dehradun) and Joinmay Electronic Pvt Ltd (Mumbai).