ED Files Supplementary Chargesheet Against Vivo China, Alleges Rs 70,000 Cr Siphoning Scheme

The Enforcement Directorate (ED) has filed a supplemental chargesheet against Vivo China, accusing the business of siphoning Rs 70,000 crore from India in the name of imports. According to an exclusive story in the Indian Express, the ED alleges Vivo China controlled Vivo Mobiles India's operations via a complicated network of shell companies and state distributors, in violation of Indian law.

As per the chargesheet, Vivo Mobile Pvt Ltd, Vivo China's Indian affiliate, sent Rs 70,837 crore outside India from 2014 to 2023 for imports from Hong Kong, Samoa and the British Virgin Islands. Vivo China allegedly controlled these international firms, with Rs 20,241 crore of the transferred cash representing import revenues. 

The ED further accuses Vivo China of disguising its ties with Vivo India by distancing itself on paper while still controlling the company's supply chain. According to the agency, Vivo China has complete control over Vivo India's operations. The ED also claims that Vivo China set up special purpose entities (SPVs) in other countries to indirectly control Vivo India.

Complex Web Of Ownership

According to the chargesheet, Vivo India was registered as a subsidiary of Multi Accord Limited, a Hong Kong-based company. Vivo China owned a stake in Lucky Crest, a Hong Kong-based firm that also owned Multi Accord. 

As per the ED, this ownership arrangement enabled Vivo China to exert control over Vivo India via a sophisticated web of intermediaries. The ED also argues that Vivo India and its 23 state distributor companies (SDCs) misrepresented their beneficial ownership to Indian authorities, which violated the Foreign Direct Investment (FDI) rules. 

The ED further stated that Vivo China exploited an Indian company, Labquest Engineering, as a front to conduct retail commercial activities in contravention of Indian FDI norms.

Earlier Arrests And Investigations

In December 2023, the ED arrested seven people in connection with their money-laundering investigation against Vivo India. The agency has recently broadened its inquiry, resulting in the submission of this supplemental chargesheet. 

The ED's probe into Vivo China's operations in India is part of a larger crackdown on foreign corporations accused of breaking financial and regulatory rules in India. The investigation is ongoing, with additional information expected in the coming months.