The Enforcement Directorate (ED) has arrested three more officials from Chinese smartphone company Vivo in an ongoing money laundering investigation. With this, the total arrests in the case have gone up to five, highlighting deepening troubles for the smartphone maker.
Background of the Case
In July this year, the ED raided Vivo offices across India as part of a money laundering probe. The agency alleges that Vivo illegally transferred funds worth Rs 62,476 crore out of India in order to avoid paying taxes.
The funds were sent under the guise of royalty payments. However, the ED believes it was a way to remit foreign exchange abroad in contravention of Indian laws.
The case is being investigated under provisions of the Prevention of Money Laundering Act (PMLA).
3 More Arrested
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On Tuesday, the ED arrested three more Vivo executives – Huijin Wei, Chief Financial Officer of Vivo Mobile India, Nitin Garg, Chief Operating Officer of Vivo India and Anish Rajan, Human Resource Head of Vivo India.
They will be in ED custody till December 20 to help investigation officers uncover more details of Vivo’s alleged financial improprieties.
Last week, the agency had arrested Zhengshen Ou, Director of Vivo Mobile India, and Zhang Jie, the company’s Finance Head.
Vivo’s Response
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In an official statement, vivo said it is cooperating with authorities to provide necessary information and explanations.
The Chinese company stated that it is committed to fully complying with laws in India. Vivo reiterated that its operations in India are firmly compliant with local laws and regulations.
However, the steady stream of arrests from the company indicates otherwise. It remains to be seen how big a net the ED will cast as it aims to unravel Vivo’s alleged money laundering schemes.
What Lies Ahead
The Vivo case is part of India’s wider crackdown on Chinese companies over security and financial concerns. Over the last few years, India has banned hundreds of Chinese apps like TikTok. It has also launched investigations into companies like Xiaomi for alleged financial wrongdoings.
As India-China geopolitical tensions continue, expect Indian agencies to strictly monitor Chinese companies operating locally. Any violations of Indian laws could prompt serious penalties in the future.
For Vivo, the arrests of its key India executives are likely just the beginning of a turbulent, long-drawn legal battle. As the ED digs deeper, more skeletons could tumble out of the closet.
