According to a court petition obtained by Reuters, Chinese smartphone maker Xiaomi Corp 1810.HK claims its senior executives were threatened with “physical violence” and coercion during questioning by India’s financial crime combating agency.
According to Xiaomi’s filing dated May 4, officials from the Enforcement Directorate warned the company’s former India managing director, Manu Kumar Jain, and current Chief Financial Officer Sameer B.S. Rao, and their families of “dire consequences” if they did not file statements as requested by the agency.
Following the publication of the Reuters story, the Enforcement Directorate issued a statement claiming that Xiaomi’s charges were “untrue and baseless” and that company officials had deposed “voluntarily in the most conducive environment.”
Xiaomi was under investigation since February, and the Indian agency confiscated $725 million from the company’s India bank accounts last week, alleging unlawful transmissions abroad “under the guise of royalty” payments.
Xiaomi has denied any wrongdoing and stated that its royalty payments were legal. A judge heard Xiaomi attorneys on Thursday and stayed the Indian agency’s move to freeze bank assets. The next hearing is scheduled for May 12th.
When executives went for questioned many times in April, the corporation claims they were intimidated by the enforcement agency.
As per the filing in the High Court of southern Karnataka state, Jain and Rao were “threatened… with dire consequences including arrest, damage to career prospects, criminal liability, and physical violence if they did not give statements as per the mandates of” the agency on certain instances.
The executives were able to resist the pressure for some time, (but) they eventually caved under such intense and aggressive abuse and pressure and made some statements, according to the report.
The Enforcement Directorate stated in a media statement that it is a professional agency with solid work ethics, and there was no compulsion or threat to the officers of the firm at any point in time.
Xiaomi declined to comment, citing ongoing legal actions as the reason. Jain and Rao did not respond to Reuters’ requests for comment. Jain is currently Xiaomi’s global vice president and is credited for the company’s success in India, where its smartphones are extremely popular.
Due to political concerns following a border skirmish in 2020, several Chinese corporations have found it difficult to do business in India. Since then, India has banned over 300 Chinese apps, citing security concerns, and has also tightened rules for Chinese corporations investing in India.
In December, tax officials searched Xiaomi’s India operations. According to court documents, the Enforcement Directorate, which investigates matters such as foreign exchange law infractions, began scrutinizing Xiaomi’s royalty payments after obtaining information from tax authorities.
According to the agency, Xiaomi Technology India Private Limited (XTIPL) sent foreign money worth 55.5 billion rupees ($725 million) to organizations abroad despite the fact that Xiaomi had “not availed any service” from them.
