ED: Vivo China siphoned off Rs 70,000 crore under garb of imports

According to the central probe agency, Vivo Mobile India Pvt Ltd remitted Rs 70,837 crore outside India since 2014. Under the “garb of payments for imports of goods”, huge amounts were siphoned off to their overseas trading companies by Vivo Mobile India Pvt Ltd, as per the agency. These imports were allegedly from entities based in Hong Kong, Samoa and British Virgin Islands and many of these overseas “trading companies” were controlled by Vivo China, alleged the ED which also said that the proceeds of crime in this case were close to `20,241 crore.

Vivo China tried to “conceal” its relationship with Vivo India to avoid getting noticed by Law enforcement agencies in India, alleged the ED in its chargesheet. Vivo China further made a setup which enabled it to “distance itself from Vivo India on paper, however, it continued to control the distribution network (supply chain) under a corporate veil,” it said. All the companies were actually “controlled and owned by one master – Vivo China” as per the ED.

According to the central probe agency, Special Purpose vehicles were set up by Vivo China in foreign countries such as Multi Accord Limited in Hong Kong. Vivo Mobile India was incorporated on August 1, 2014 and it was registered as a subsidiary of Multi Accord Ltd. On the other hand, Vivo China was allegedly a shareholder of Lucky Crest, registered in Hong Kong which was in turn a shareholder of Multi Accord. This is how the ED illustrates the alleged control of Vivo China over Vivo India in its chargesheet.

Vivo India and its 23 state distributor companies “wilfully misdeclared” its beneficial ownership to the Indian Government, the agency claimed. On the other hand, it alleged that Vivo China had “created a web of overseas trading companies” which was designed “under a corporate veil to hide their beneficial ultimate owner”. These trading companies allegedly operated from Room No. 901, Yip Fung Building in Hong Kong. In a statement, ED said, Vivo India IT manager Vikas Kumar told them that he directly reports to a Chinese National, who works from the office of Vivo China.

As per the ED, Vivo China used an Indian company named Labquest Engineering Pvt Ltd as a “front to carry out retail business activities” which were not permitted to be carried out through 100% FDI under the automatic route as per India’s FDI policy. The agency also alleged that Chinese Nationals used Indian company Lava international Ltd to get invitation letters to come to India to “avoid any suspicion”.