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New Delhi: Vivo, a Chinese phone manufacturer, allegedly used a web of nearly two dozen shell companies to remit over Rs 1 lakh crore, a sum that amounts to more than 50 per cent of the company’s turnover, to China between 2014 and 2021.
This is among the charges made in the charge sheet filed by the Enforcement Directorate (ED) in the money-laundering probe against the company.
According to the charge sheet, details of which have been accessed by ThePrint, the funds were remitted outside India since the company’s inception, to some trading companies that were hired with the “intent to create a masking layer so that control of Vivo, China, over these Indian companies does not come to the notice of the government authorities”.
These remittances, the ED says, were made in order to project huge losses in the Indian incorporated companies to avoid taxes in India.
Speaking to ThePrint, an ED officer alleged that investigations have suggested that all major decisions for Vivo India flowed from China.
“While no profit was shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid in India, huge sums were found to be siphoned off out of India,” the source said.
The ED Thursday filed its charge sheet in the money-laundering probe against Vivo.
ED officials said the accused named in the charge sheet include Hari Om Rai, founder and managing director of Lava International, accused of assisting Vivo, Guangwen Kyang alias Andrew Kuang, a Chinese national, Nitin Garg, a chartered accountant who worked for Vivo, and Rajan Malik, the statutory auditor of Lava.
Vivo as a company has also been named as an accused in the charge sheet, they said.
The source said while “Vivo India maintained that they did not have any relation to Vivo China and functioned independently, it was found that all major decisions for Vivo India were being made from China”.
“We have recovered electronic evidence substantiating this.”
Vivo Mobiles India Pvt Ltd was incorporated in August 2014 as a subsidiary of Multi Accord Ltd, a Hong Kong-based company, and was registered by the Registrar of Companies (RoC) in Delhi.
The ED launched its investigation under the Prevention of Money Laundering Act (PMLA) in February this year on the basis of a case filed by the Economic Offences Wing of the Delhi Police in December 2021 against Grand Prospect International Communication Pvt Ltd (GPICPL) — a company associated with Vivo — and its directors, shareholders, and certifying professionals.
The FIR was filed after the Ministry of Corporate Affairs (MCA) lodged a complaint alleging that GPICPL and its shareholders had used “forged identification documents and falsified addresses at the time of incorporation”.
GPICPL, the ED says, was registered on 3 December 2014 at RoC Shimla, with addresses in Solan (Himachal Pradesh) and Gandhi Nagar (Jammu).
An investigation, it adds, revealed that the addresses mentioned by the directors of GPICPL did not belong to them, but in fact housed a government building and the home of a senior civil servant.
Vivo has maintained that it is “cooperating with the authorities to provide them with all required information”, and that it is “committed to be fully compliant with law”.
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‘Indian entities controlled from China’
When the ED started the money-laundering investigation, it purportedly found that GPICPL director Bin Lou, who was also a former director of Vivo, incorporated over 18 companies across India, just after the incorporation of Vivo in 2014-15. Another Chinese national, Zhixin Wei, was also said to have incorporated four companies.
All these companies, the charge sheet says, were “centrally controlled from China by Vivo Mobile Communication Co, formerly known as Mis BBK Communication, through its employees namely Andrew Kuang, Ray Zhu and Ye Liao”.
“All these employees were sent by Mis Vivo Mobile Communication Co Ltd, China, to incorporate Mis Vivo India and state distributor companies by arranging invitation letters through Hari Om Rai’s company Mis Lava International,” the charge sheet says.
The charge sheet says the companies “were registered as separate entities only to hide the true nature of the conglomerate from the government authorities and a garb of genuine business activities was created”.
These companies, investigators alleged, transferred huge amounts of funds to Vivo China.
According to the ED, its investigation has substantiated that the actual ownership of Vivo India and the state companies had been concealed at the time of incorporation and subsequent corporate filings before the MCA.
The corporate structure, the ED has said, was so devised by Vivo India that their beneficial owners remained hidden from the government authorities — by “hatching a well-planned criminal conspiracy wherein they forged identity documents and entered India by making use of pass-through entity located in Hong Kong i.e. Multi Accord Limited”.
“Investigation in the case has revealed that there was complete Chinese control over the Indian entities and that the Chinese ownership and control was concealed from the Indian authorities,” the ED officer quoted above said.
“In the process, these individuals and entities also resorted to forged documentation and obtained valuable securities by cheating government authorities,” the ED officer added.
The officer said the “manner in which the entire structure was set up all over the country without revealing its true ownership and control and was given a garb of genuine business activities reflects a well-planned multi-layered criminal conspiracy”.
The ED has also stated that this was a “criminal conspiracy” to “utilise Indian companies as a front to get a foothold in Indian territory in gross violation of the extant FDI norms”
‘Employees without appropriate visa’
The ED has also alleged in the charge sheet that many employees of the Vivo group companies worked in India without appropriate visas, and in violation of business visa terms.
“Documents collected so far during the investigation have revealed that at least 30 Chinese individuals entered India using business visas with the intent to work as employees in Vivo companies,” the charge sheet says.
“Though they worked for Vivo companies in India, they never disclosed Vivo companies as their employer in their visa applications.”
The ED said that, during its investigation, it was found that various Chinese nationals had been travelling across India, including sensitive places like Jammu & Kashmir and Ladakh, in “gross violation of Indian visa conditions”.
(Edited by Sunanda Ranjan)
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