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Enforcement Directorate arrests four in money laundering case against Chinese smartphone maker Vivo

The ED has alleged that the four individuals were “carrying out activities prejudicial to the economic sovereignty of India,” the Indian Express reported.

The Enforcement Directorate (ED) arrested four individuals—Hari Om Rai, MD, Lava International Company, Chinese national Andrew Kuang, and chartered accountants Nitin Garg and Rajan Malik— in a money laundering probe against the Chinese smartphone manufacturer Vivo on October 10. 

According to a report by the Indian Express, the ED has alleged that the four of them 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,” and used forged documents to open bank accounts. The four arrested individuals have been remanded to ED’s custody. 

Vivo has responded to the arrests and said in a statement to ET that it “ firmly adheres to its ethical principles and remains dedicated to legal compliance,” adding that the recent arrests concern the company and that Vivo will exercise all available legal options. 

Why it matters:

The Indian government looks to be pushing back against Chinese dominance across various industries— from banning drone manufacturers from using Chinese components to imposing restrictions on Chinese telecom equipment manufacturers. 

Besides Vivo, other Chinese players in the smartphone industry, Oppo and Xiaomi, have also been under investigation by the ED. Chinese smartphone manufacturers make up a large portion of India’s smartphone market share, and the ED argues that their alleged tax evasion and money laundering causes a depletion of the tax base in India. These arrests seem to be in line with the ED’s ongoing investigations. 

Another entry in Vivo’s troubles in India:

This isn’t the first time Vivo has been in hot water with the ED. In July 2022, the Directorate conducted a nationwide raid of Vivo’s offices and asked nine different banks (including Yes Bank, Bank of Baroda, and ICICI) to direct a debit freeze. Then, in July this year, the Ministry of Electronics and Information Technology (MeitY) stated that Vivo was engaging in tax evasion. It said that Vivo was evading Rs. 2923 crores worth of taxes—Rs. 2875 crores in customs duty and Rs. 48 crores in goods and services tax (GST).

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Further, just this week, Vivo and Xiaomi were also accused of illegally funding NewsClick. While Xiaomi has denied the accusation, Vivo did not immediately respond. 

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