Enforcement Directorate Files Chargesheet Against Vivo in Money Laundering Case

• ByStartupStory     |    December 8, 2023

The Enforcement Directorate (ED) has reportedly filed a chargesheet against Chinese smartphone maker Vivo in connection with a money laundering case. The chargesheet, filed under the provisions of the Prevention of Money Laundering Act (PMLA), also names 23 other associate companies, including Lava International, according to news agency PTI.

As per The Hindu Business Line (HBL), the chargesheet alleges that Vivo diverted proceeds of nearly INR 1 Lakh Cr from India to overseas through shell companies. The development follows a Delhi court’s decision to extend the judicial custody of four accused individuals in the case, including Lava International’s managing director Hari Om Rai, a Chinese national Guangwen, and chartered accountants Nitin Garg and Rajan Malik.

The accused were arrested for activities that allegedly aided the Chinese smartphone manufacturer in accumulating wrongful profits detrimental to India’s economic sovereignty. The chargesheet claims that the Chinese national floated around 19 shell companies to launder money earned from business activities in India and then transfer it out of the country.

Vivo India had previously challenged a Delhi High Court order that sent the Chinese national to ED’s custody. However, the plea was quashed by Justice Swarana Kanta Sharma, noting the involvement of the Chinese national in incorporating companies for acquiring and syphoning off funds.

The ED initiated the investigation against Vivo India in 2021, suspecting that the company illegally transferred over INR 60,000 Cr to its Chinese entity to evade taxes in India. Vivo has consistently denied these allegations. Subsequently, in July last year, the ED raided 48 premises linked to Vivo for suspected money laundering. At that time, the ED claimed that Vivo transferred proceeds amounting to INR 62,476 Cr out of India to avoid tax payments, leading to the government halting the export of 27,000 Vivo phones from India worth $15 Mn.

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