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India accuses China's Vivo of visa violations, siphoning off $13 billion
Thu, October 12, 2023
A man cleans the logo of a Chinese smartphone brand Vivo outside a store in Ahmedabad
By Arpan Chaturvedi and Aditya Kalra
NEW DELHI (Reuters) - Many employees of Chinese smartphone maker Vivo and its Indian affiliates concealed their employment when seeking visas, and some breached rules by visiting the "sensitive" Himalayan region of Jammu and Kashmir, India's financial crime agency has said.
The court statement comes as tension rises with Beijing over business activities after New Delhi tightened curbs on incoming investment and banned hundreds of Chinese apps following border clashes in 2020 that killed 20 Indian and four Chinese troops.
The accusations, detailed on Tuesday in a court filing that is not public, follow the arrest this week of a Vivo executive, Guangwen Kuang, in a money laundering investigation launched in 2022 into India's second biggest smartphone player.
At least 30 Chinese individuals entered India on business visas and worked as Vivo employees, but their application forms "never disclosed" that the firm was their employer, the agency, the Enforcement Directorate, said in the 32-page filing.
"Various Chinese nationals have been traveling across India, including sensitive places of Jammu and Kashmir and Ladakh, in gross violation of Indian visa conditions," it added, shedding light for the first time on the alleged offences.
"Many employees of Vivo group companies worked in India without appropriate visas," the agency said in the filing.
"They have concealed information regarding their employer in their visa applications and cheated the Indian embassy or missions in China."
Asked for comment, Vivo, which has a market share of 17%, reiterated a statement from earlier this week that said the executive's arrest "deeply concerns us", while adding that it remained "dedicated to legal compliance".
China's foreign ministry, which said this week it was closely following the case, did not respond to a Reuters request for comment.
The Indian embassy in Beijing and the foreign ministry in New Delhi also did not respond.
In their decades-old border dispute, both India and China claim large tracts of land controlled by the other in the western Himalayas.
India bars foreigners from entering or staying in the areas of Ladakh and parts of Jammu and Kashmir it has designated as "protected", unless they have a permit from the authorities - a document that is separate from a visa.
Last year, the agency raided 48 sites linked to Vivo and its associates in the money laundering investigation, accusing the company of illegally siphoning money to China to evade Indian taxes through companies it indirectly controls.
This week's court filing says 1.07 trillion rupees ($12.87 billion) was remitted outside India by Vivo to some trading companies controlled by its Chinese parent, in what the agency called a "masking layer" intended to escape government notice.
"While no profits were shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid ... huge sums were siphoned off out of India," the Enforcement Directorate added.
In July last year, the agency estimated a figure of 624.7 billion rupees ($7.5 billion) had been remitted mainly to China.
(Reporting by Arpan Chaturvedi and Aditya Kalra; Additional reporting by Brenda Goh in Shanghai, David Kirton in Shenzhen and Krishn Kaushik in New Delhi; Editing by Clarence Fernandez)
Thu, October 12, 2023
A man cleans the logo of a Chinese smartphone brand Vivo outside a store in Ahmedabad
By Arpan Chaturvedi and Aditya Kalra
NEW DELHI (Reuters) - Many employees of Chinese smartphone maker Vivo and its Indian affiliates concealed their employment when seeking visas, and some breached rules by visiting the "sensitive" Himalayan region of Jammu and Kashmir, India's financial crime agency has said.
The court statement comes as tension rises with Beijing over business activities after New Delhi tightened curbs on incoming investment and banned hundreds of Chinese apps following border clashes in 2020 that killed 20 Indian and four Chinese troops.
The accusations, detailed on Tuesday in a court filing that is not public, follow the arrest this week of a Vivo executive, Guangwen Kuang, in a money laundering investigation launched in 2022 into India's second biggest smartphone player.
At least 30 Chinese individuals entered India on business visas and worked as Vivo employees, but their application forms "never disclosed" that the firm was their employer, the agency, the Enforcement Directorate, said in the 32-page filing.
"Various Chinese nationals have been traveling across India, including sensitive places of Jammu and Kashmir and Ladakh, in gross violation of Indian visa conditions," it added, shedding light for the first time on the alleged offences.
"Many employees of Vivo group companies worked in India without appropriate visas," the agency said in the filing.
"They have concealed information regarding their employer in their visa applications and cheated the Indian embassy or missions in China."
Asked for comment, Vivo, which has a market share of 17%, reiterated a statement from earlier this week that said the executive's arrest "deeply concerns us", while adding that it remained "dedicated to legal compliance".
China's foreign ministry, which said this week it was closely following the case, did not respond to a Reuters request for comment.
The Indian embassy in Beijing and the foreign ministry in New Delhi also did not respond.
In their decades-old border dispute, both India and China claim large tracts of land controlled by the other in the western Himalayas.
India bars foreigners from entering or staying in the areas of Ladakh and parts of Jammu and Kashmir it has designated as "protected", unless they have a permit from the authorities - a document that is separate from a visa.
Last year, the agency raided 48 sites linked to Vivo and its associates in the money laundering investigation, accusing the company of illegally siphoning money to China to evade Indian taxes through companies it indirectly controls.
This week's court filing says 1.07 trillion rupees ($12.87 billion) was remitted outside India by Vivo to some trading companies controlled by its Chinese parent, in what the agency called a "masking layer" intended to escape government notice.
"While no profits were shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid ... huge sums were siphoned off out of India," the Enforcement Directorate added.
In July last year, the agency estimated a figure of 624.7 billion rupees ($7.5 billion) had been remitted mainly to China.
(Reporting by Arpan Chaturvedi and Aditya Kalra; Additional reporting by Brenda Goh in Shanghai, David Kirton in Shenzhen and Krishn Kaushik in New Delhi; Editing by Clarence Fernandez)
India arrests Chinese employee of smartphone maker Vivo
Nikhil Inamdar and Mariko Oi - BBC News
Wed, October 11, 2023
India's financial crimes agency has arrested a Chinese employee of smartphone maker Vivo, the firm said.
Indian officials have not commented yet but Vivo said it "will exercise all available legal options" on behalf of its employee, Andrew Kuang.
Authorities raided Vivo's office last year, accusing it of illegal remittances from India to China.
It is the second-biggest smartphone brand in India, after Samsung, according to industry data.
Vivo has denied any wrongdoing and said it complies with Indian law.
The arrest comes on the back of a widening rift between India and China.
Last week, Reuters reported that Indian police had formally accused Vivo of helping transfer funds illegally to NewsClick, a news portal that is under investigation on charges of spreading Chinese propaganda.
Tuesday's arrest happened under the Prevention of Money Laundering Act (PMLA). It is "a very stringent law and allows for criminal cases to be filed, unlike regular foreign exchange violations which are majorly considered civil offenses," according to Atul Pandey, Senior Partner at legal firm Khaitan.
Vivo has also been accused of customs evasion by the tax enforcement agency. The firm is owned by China's BBK Electronics, which also operates brands such as Oppo and Realme in India.
In the past 18 months, Indian authorities have also targeted other Chinese mobile phone companies such as Xiaomi by freezing $670m of assets.
Earlier this year, India's minister of state for electronics and IT Rajeev Chandrashekhar told parliament that Chinese companies had evaded taxes to the tune of $1.1bn. He said the government had managed to recover only about 18% of this amount.
Speaking to the BBC on the condition of anonymity, a senior legal counsel who represents several Chinese companies in India said that the crackdown was initially meant to put pressure on the Chinese government in the aftermath of a deadly border clash in 2020 that killed 24 soldiers. India had responded then by banning hundreds of Chinese apps, including TikTok.
But subsequent investigations have led to major Chinese firms such as Xaomi and Oppo India being accused of financial crimes. Both firms have denied the allegations.
Relations between the neighbours have deteriorated since, with India most recently registering "strong protest" over a new Chinese map that it said laid claim to its territory.
Nikhil Inamdar and Mariko Oi - BBC News
Wed, October 11, 2023
India's financial crimes agency has arrested a Chinese employee of smartphone maker Vivo, the firm said.
Indian officials have not commented yet but Vivo said it "will exercise all available legal options" on behalf of its employee, Andrew Kuang.
Authorities raided Vivo's office last year, accusing it of illegal remittances from India to China.
It is the second-biggest smartphone brand in India, after Samsung, according to industry data.
Vivo has denied any wrongdoing and said it complies with Indian law.
The arrest comes on the back of a widening rift between India and China.
Last week, Reuters reported that Indian police had formally accused Vivo of helping transfer funds illegally to NewsClick, a news portal that is under investigation on charges of spreading Chinese propaganda.
Tuesday's arrest happened under the Prevention of Money Laundering Act (PMLA). It is "a very stringent law and allows for criminal cases to be filed, unlike regular foreign exchange violations which are majorly considered civil offenses," according to Atul Pandey, Senior Partner at legal firm Khaitan.
Vivo has also been accused of customs evasion by the tax enforcement agency. The firm is owned by China's BBK Electronics, which also operates brands such as Oppo and Realme in India.
In the past 18 months, Indian authorities have also targeted other Chinese mobile phone companies such as Xiaomi by freezing $670m of assets.
Earlier this year, India's minister of state for electronics and IT Rajeev Chandrashekhar told parliament that Chinese companies had evaded taxes to the tune of $1.1bn. He said the government had managed to recover only about 18% of this amount.
Speaking to the BBC on the condition of anonymity, a senior legal counsel who represents several Chinese companies in India said that the crackdown was initially meant to put pressure on the Chinese government in the aftermath of a deadly border clash in 2020 that killed 24 soldiers. India had responded then by banning hundreds of Chinese apps, including TikTok.
But subsequent investigations have led to major Chinese firms such as Xaomi and Oppo India being accused of financial crimes. Both firms have denied the allegations.
Relations between the neighbours have deteriorated since, with India most recently registering "strong protest" over a new Chinese map that it said laid claim to its territory.
Arpan Chaturvedi and Aditya Kalra
Updated Tue, October 10, 2023
A man cleans the logo of a Chinese smartphone brand Vivo outside a store in Ahmedabad
By Arpan Chaturvedi and Aditya Kalra
NEW DELHI (Reuters) -India's financial crime agency on Tuesday arrested four industry executives including one Chinese national working for smartphone maker Vivo in India in a case of alleged money laundering, according to legal papers and lawyers working on the case.
The arrest adds to the legal troubles of the Chinese phone maker in India and comes amid rising tensions between Beijing and New Delhi over issues ranging from border disputes to India's increasing scrutiny of Chinese businesses and investment.
Vivo said in a statement it "firmly adheres to its ethical principles and remains dedicated to legal compliance. The recent arrest deeply concerns us. We will exercise all available legal options".
India's Enforcement Directorate (ED) did not immediately respond to requests for comment.
Earlier in the day, two sources told Reuters that four Vivo employees had been arrested, but during a court hearing where executives were produced lawyers said only one Vivo employee, a Chinese national identified in legal papers as Guanwen Kuang, was arrested.
Further details of the investigation were not immediately clear. The ED’s counsel, Manish Jain, sought 10 day custody for the arrested individuals, but the judge ordered only three days.
The names of three other executives, and their affiliations, were not immediately clear.
The executives were arrested in relation to an ongoing 2022 case where the ED raided Vivo's offices and accused it of money laundering, the first of the sources said.
Vivo has repeatedly denied the allegations. It has previously said it cooperated with authorities to provide them with all required information and was "committed to be fully compliant with laws".
Vivo is owned by China's BBK Electronics, which also operates brands such as Oppo and Realme in India. Vivo is the second biggest smartphone brand in India with a 17% market share in shipments, trailing behind Samsung, according to data from research firm Counterpoint.
In 2022, the ED blocked 119 bank accounts linked to Vivo's India business, but a court later revoked the move.
Indian police also have formally accused Vivo of helping transfer funds illegally to a news portal under investigation on charges of spreading Chinese propaganda, Reuters reported last week. Vivo hasn't commented on the matter.
Relations between India and China have increasingly soured since a 2020 military clash on their disputed Himalayan border in which 20 Indian soldiers and four Chinese troops were killed.
Since then, India has banned hundreds of Chinese apps including TikTok, citing national security concerns, and tightened scrutiny of incoming investments from its neighbour.
Recently, carmaker BYD's proposal to invest $1 billion to build electric cars and batteries in India faced increased scrutiny from New Delhi, forcing the carmaker to drop its plans, Reuters reported in July.
(Reporting by Aditya Kalra and Arpan Chaturvedi in Delhi; Editing by Sohini Goswami, Kim Coghill and Mark Potter)
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