The Enforcement Directorate (ED) has filed a supplementary chargesheet accusing Vivo China of remitting ₹70,837 crore from India under the guise of payment for imports. This revelation has sparked widespread concern over alleged financial irregularities and corporate malpractice. The ED’s probe reveals a complex web of companies and transactions that, it claims, were orchestrated to siphon off large sums of money, raising questions about transparency in multinational operations.
Credits: MSN
The Allegations: A Web of Financial Misdeeds
According to the ED, since 2014, Vivo Mobile India has transferred significant sums to overseas companies that were ostensibly controlled by its Chinese parent, Vivo China. The probe agency alleges that these funds, amounting to ₹70,837 crore, were sent to trading companies based in Hong Kong, Samoa, and the British Virgin Islands under the pretense of paying for imported goods. Of this total, the ED states that around ₹20,241 crore represents the actual value of imports, suggesting that a substantial portion of the funds was funneled out for other purposes.
In its supplementary chargesheet, the ED claims that Vivo China “controlled and monopolized” the operations of its Indian subsidiary, Vivo Mobile India, through its 23 state distributor companies. Despite an apparent attempt to distance itself from Vivo India on paper, the Chinese parent company allegedly maintained control over the supply chain and major financial decisions.
How Did Vivo China Conceal Its Control?
The central probe agency details an elaborate structure involving Special Purpose Vehicles (SPVs) set up by Vivo China in various foreign countries. One of the key players in this complex web was a company named Multi Accord Limited, registered in Hong Kong, which owned a stake in Vivo Mobile India. Additionally, the ED claims that Vivo China was also linked to another Hong Kong-based entity, Lucky Crest, which held shares in Multi Accord.
This intricate setup, the ED alleges, allowed Vivo China to control Vivo India indirectly. By utilizing these offshore entities, Vivo China could conceal its influence while funneling funds out of India. The ED contends that all these entities were part of a grand scheme to evade regulatory scrutiny and move large sums of money outside the country.
Credits: Myind.net
What the ED’s Investigation Revealed
The ED’s investigation, which is part of a broader probe into money laundering and corporate fraud, has uncovered numerous documents and bank statements that it claims support its allegations. The agency asserts that Vivo Mobile India’s records show these massive remittances, but the companies that received these funds were linked back to Vivo China through various layers of ownership.
Moreover, the ED alleges that these remittances were disproportionately higher than the actual value of the imports, raising concerns about their legitimacy. The remitted funds were allegedly funneled to trading companies that provided minimal goods or services in return, indicating a potential effort to move money out of India for purposes unrelated to business operations.
The Scale of the Operation
The scale of the alleged siphoning is staggering. A sum of ₹70,837 crore over the span of eight years represents a significant financial outflow that, according to the ED, was carefully hidden through a web of shell companies. The investigation into Vivo’s operations has revealed deep-rooted connections between Vivo India and Vivo China, despite efforts by the Chinese parent to portray its Indian subsidiary as a separate entity.
The ED has also pointed out that Vivo India’s transactions were largely with companies based in tax havens like the British Virgin Islands and Samoa. These regions are often associated with shell companies and financial structures designed to obscure the origins and destinations of funds, further complicating the investigation.
Vivo’s Response and the Legal Fallout
As of now, Vivo India and its Chinese parent company have not issued any formal statements in response to the ED’s allegations. However, these revelations are likely to escalate into a legal battle that could affect Vivo’s operations in India. With the ED’s chargesheet now in court, the judiciary will play a critical role in determining the veracity of the agency’s claims and deciding the future of the company’s presence in the country.
