Vivo India remitted almost 50% of turnover to China to avoid taxes: ED

The Enforcement Directorate’s probe into the Chinese mobile manufacturing firm, Vivo has opened a Pandora’s box as investigations revealed that the Indian arm of the smartphone maker remitted Rs 62,476 crore, out of the total sale proceeds of Rs 1,25,185 crore, outside the country, mainly to China. According to sleuths, this accounted for almost 50 per cent of the turnover.

“These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” said ED officials .

The ED heat on Vivo intensified with the agency saying on Thursday that employees of Vivo India, including some Chinese nationals, have not cooperated with the searches conducted by the anti-money laundering agency and have “tried to abscond, remove and hide digital devices which have been retrieved by the search teams.” 

The allegations are significant as they come a day after the Chinese authorities said they were closely following the developments, hoping India would conduct the probe in accordance with law.

The ED officials on Thursday said due procedures as per the law were being followed during the search operations at each premises, but key persons went missing and attempts were made to hide evidence.

On Tuesday, the ED had carried out searches at 48 locations belonging to Vivo Mobiles India Private Limited and its 23 associated companies across the country.

The investigations have shown that Vivo Mobiles India Pvt Ltd was incorporated on August 1, 2014 as a subsidiary of Multi Accord Ltd, a Hong Kong-based company, and was registered in Delhi. Thereafter, one of its associated companies, Grand Prospects International Communication Pvt. Ltd was registered in December 2014 in Shimla with addresses of Solan in Himachal Pradesh and Jammu. The company was allegedly incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of one Indian Chartered accountant. 

According to ED officials, Bin Lou left India on April 26, 2018 while Zhengshen Ou and Zhang Jie left the country in 2021.

The ED registered a case under the Prevention of Money Laundering Act in February this year on the basis of an FIR filed by Delhi Police in December last year  against Grand Prospect International Communication Private Limited and its director, shareholders and certifying professionals on the basis of complaint filed by the Ministry of Corporate Affairs.

According to the FIR, GPICPL and its shareholders had used forged identification documents and false addresses at the time of incorporation. “The allegations were found to be true as the investigation revealed that the addresses mentioned by the directors of GPICPL did not belong to them, but in fact it was a government building and the house of a senior bureaucrat,” said an ED statement on Thursday.

Further probe by the ED revealed that Bin Lou was the director of GPICPL and also an ex-director of Vivo. “He had incorporated around 18 companies across various states just after the incorporation of Vivo in 2014-15. Another Chinese national Zhixin Wei incorporated four companies,” said the agency. 

So far, 119 bank accounts of various entities with balance of Rs 465 crore including fixed deposits of 66 crore of Vivo India, two kilograms of gold bars and Rs 73 lakhs cash, have been seized under the provisions of PMLA. 

On Wednesday, Chinese Foreign Ministry spokesman Zhao Lijian said in a statement, “We hope the Indian authorities will abide by laws as they carry out the investigation and enforcement activities, and provide a truly fair, just and non-discriminatory business environment for Chinese companies investing and operating in India.” On its part, a Vivo India spokesperson said they are cooperating with the authorities.