Vivo China siphoned off Rs 70,000 crore from India, alleges ED
By MYBRANDBOOK
Vivo is back in the news again for the infamous money laundering case, with the Enforcement Directorate now making several serious allegations against the Chinese mobile company, in its supplementary chargesheet. The ED has accused it of siphoning off Rs 70,000 crore from India under the guise of imports, and controlling Vivo India from Room 901 in a Hong Kong building, among others.
According to the law enforcement and economic intelligence agency, Vivo China controlled and monopolised all the operations of Vivo Mobiles in India through Vivo India and its 23 SDCs (state distributor companies).
The chargesheet alleges that Vivo Mobile India Pvt Ltd remitted Rs 70,837 crore outside India since 2014. As per the agency, huge amounts were siphoned off to their overseas trading companies by Vivo Mobile India Pvt Ltd under the garb of payments for imports of goods.
These imports, as the chargesheet, were allegedly from entities based in Hong Kong, Samoa and British Virgin Islands and many of these overseas trading companies were controlled by Vivo China. The ED alleged that the proceeds of crime in this case were nearly Rs 20,241 crore.
The ED chargesheet further claims that Vivo China tried to conceal its connection with Vivo India to avoid scrutiny by Indian law enforcement. In spite of efforts to create a formal separation on paper, Vivo China allegedly maintained control over Vivo India's supply chain through a corporate veil.
The probe agency argued that all the companies involved were ultimately controlled by Vivo China, which is also accused of setting up special purpose vehicles in foreign countries, such as Multi Accord Limited in Hong Kong, to further its interests.
According to the probe agency, Vivo Mobile India was incorporated on August 1, 2014 and it was registered as a subsidiary of Multi Accord Ltd, whereas Vivo China was allegedly a shareholder of Lucky Crest, registered in Hong Kong which was in turn a shareholder of Multi Accord.
The ED claimed that Vivo India and its 23 state distributor companies wilfully misdeclared its beneficial ownership to the Indian Government. Further, it alleged that Vivo China had created a web of overseas trading companies which was designed under a corporate veil to hide their beneficial ultimate owner. These trading companies, as per the agency, operated from Room No. 901, Yip Fung Building in Hong Kong.
The ED chargesheet further claims that Vivo India's IT manager Vikas Kumar had admitted to reporting directly to a Chinese national who worked from the office of Vivo China.
Vivo China allegedly used an Indian company, Labquest Engineering Pvt Ltd, as a front to engage in retail activities not allowed under India's FDI policy, which restricts 100 per cent FDI in such ventures. Besides, Chinese nationals, as per the ED, used Lava International Ltd, another Indian company to get invitation letters to enter India, evading doubt.
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