Lava MD and one Chinese national among four arrested in Vivo money laundering case

Four persons which include a Chinese National and the Managing Director of Lava International mobile company have been arrested by the Enforcement Directorate (ED) in connection with a money laundering probe against smartphone maker Vivo.

The four arrested are Hari Om Rai, MD, Lava International Company, Chinese national Andrew Kuang, and chartered accountants Nitin Garg and Rajan Malik. They were sent to three-day ED custody by Additional Sessions Judge Devender Kumar Jangala.

It is alleged by the ED in its remand application that the accused had cheated the government by entering India in a “disguised and fraudulent manner to set up an elaborate Chinese-controlled network throughout the country… carrying out activities prejudicial to the economic sovereignty of India”.

Further, it was alleged by the ED that the employees of Vivo worked without appropriate visas and were acting in a way that was in grave violation of the employment visa rules for entry into India. Charged with criminal conspiracy, cheating, using forged documents and money laundering, the ED accused the four of concealing Chinese control over Indian entities from the government of India. Also, the ED alleged that to open bank accounts, the accused used forged documents.  

As per the investigation of the ED, a “huge sums were siphoned out of India”. The violation of FDI norms by Vivo from 2014 to 2018 was also alleged by the ED. It said that since wholesale cash and carry businesses don’t require government approval under the 100% automatic FDI route, Vivo “under the garb” of a wholesale cash and carry business concealed its ownership. The ED found out during its investigation that remittances over Rs 1 lakh crore were allegedly transferred outside India to “trading companies” so that Vivo couldn’t be noticed by the government of India. It was noted by the agency that zero profits were shown from 2014 to 2020 and no income taxes were paid in India. The ED entered the probe following a complaint lodged by the Corporate Affairs Ministry alleging that GPICPL and its shareholders used “forged” identification documents and fake addresses at the time of its incorporation in 2014.

Last year in July, the ED raided Vivo in relation to money laundering offences. At that time ED alleged that Rs 62,476 crore was “illegally” transferred by Vivo to China in order to avoid payment of taxes in India — this figure was almost half of their turnover. These transfers, according to the ED, were made to show losses and to avoid paying taxes in India.