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Money laundering: China to provide consular assistance to its Vivo staff arrested in India

Money laundering: China to provide consular assistance to its Vivo staff arrested in India

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Virendra Pandit

 

New Delhi: China will provide consular protection and assistance to two Chinese employees of smartphone maker Vivo arrested in India on money laundering charges, as Beijing urged New Delhi not to discriminate against Chinese companies.

“We are closely following what you mentioned. The Chinese government firmly supports Chinese companies to safeguard their lawful rights and interests,” Mao Ning, China’s foreign ministry spokesperson, told a regular press conference on Monday, the media reported.

The Enforcement Directorate (ED), India’s financial crime-fighting agency, last week arrested two senior employees of Vivo’s India unit, a move the company vowed to challenge legally. They were brought to a Delhi court on Saturday and sent to the ED’s custody.

The two Vivo employees will now appear in court on Tuesday, the reports said.

Their arrests came two months after the ED arrested four industry executives, including a Chinese national, working for Vivo’s Indian unit in a case of alleged money laundering, charges the firm has denied.

Earlier, Vivo India’s interim Chief Executive Officer (CEO) Hong Xuquan, Chief Financial Officer (CFO) Harinder Dahiya, and consultant Hemant Munjal were arrested by the ED on charges of money laundering and remanded to custody by a sessions judge in Patiala House Court for three days.

The order was issued because the executives held critical positions and played a crucial role in acquiring Rs. 20,241 crores as proceeds of crime, and were not cooperating with the authorities, the agency said.

Interim CEO Hong Xuquan was cited as a witness in the previous complaint filed by the ED, saying said the custodial interrogation of the three accused was required for tracing and determining the money trail of the proceeds of crime.

The ED cited the involvement of Dahiya in concealing beneficial ownership of Vivo India and that the person was aware of the complex structure created by Vivo China with the intent to siphon off funds out of the country.

The court also directed ED to conduct an inquiry into claims by the accused that the three executives have been in ED’s custody since December 21.

“We are deeply alarmed by the current action of the authorities. The recent arrests demonstrate continued harassment and as such induce an environment of uncertainty amongst the wider industry landscape. We are resolute in using all legal avenues to address and challenge these accusations,” a Vivo spokesperson said on Sunday.

The high-profile arrests follow the arrests of four industry executives in October, including Lava International managing director Hari Om Rai, chartered accountants Nitin Garg and Rajan Malik, and Chinese national Guangwen Kyang, alias Andrew Kuang, allegedly associated with wrongdoings by the Chinese smartphone maker in India.

The four executives are in judicial custody. The ED filed a chargesheet following their arrests on December 6 and a complaint filed before a special court under the criminal sections of the Prevention of Money Laundering Act (PMLA).

The Indian agency raided Vivo India and associated persons in July 2022 because the company was part of the money laundering racket involving Chinese nationals and multiple Indian companies. The ED also alleged that Rs. 62,476 crore was “illegally” transferred by Vivo India to China to avoid payment of taxes in India.

The agency had also told the court that Rs. 1.07 trillion was remitted outside India by Vivo to some trading companies controlled by its Chinese parent, according to an October 13 report.

At that time, the company said it “firmly adheres to its ethical principles and remains dedicated to legal compliance.”

The Chinese firms have been under the scanner of the probe agency since 2020 when New Delhi tightened curbs on incoming investment and banned hundreds of Chinese apps following border clashes in East Ladakh.

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