The Enforcement Directorate (ED) on Tuesday contended that since its inception of Grand Prospect International Communication Pvt Ltd (GPICPL) by Chinese nationals on falsified documents, it received Rs 1,487 crore in its bank accounts and out of this, Rs 1,200 crore were transferred to Chinese mobile phone maker Vivo India Pvt Ltd’s bank accounts.
The revelations were made in the court by the ED, which earlier in the day arrested three executives of the Chinese mobile phone maker Vivo, identified as Chinese national Guangwen Kyang aka Andrew Kuang, Rajan Malik, and chartered accountant Nitin Garg, as well as Lava International MD Hari Om Rai.
The court sent all to three days ED custody.
The ED informed the court that certain Chinese shareholders of GPICPL incorporated the company on the basis of forged identification documents and falsified addresses.
“During the course of enquiry, certain fraudulent activities were found by the Ministry of Corporate Affairs. The said company was not reporting as a subsidiary of Vivo in the official records whereas the said company publicly projects itself to be subsidiary of Vivo,” the ED alleged.
It also alleged that Director and Share Holder Zhang Jie used a false driving licence for applying Director Identification Number (DIN) for giving his Shillong address and also used his fake driving licence in opening the bank account.
Besides Zhang, Zhengshen Ou and Bin Lou were also founders and stakeholders of the GPICPL and several other companies in India. Bin was also an ex-director of Vivo.
“Various companies were incorporated across India having the Chinese nationals as Directors and shareholders. These companies controlled the complete supply chain of Vivo and had set up an elaborate and well knit network spread across the country.
“The investigation conducted by the agency has revealed that since the incorporation in 2014 till 2021, a sum of Rs 1,487 crore was received in the bank account of GPICPL. Out of Rs 1,487 crore credited into the bank account of GPICPL, approximately Rs 1,200 crore was transferred to Vivo India Pvt. Ltd,” the ED told the court.
It alleged that the grounds of arrest itself also contain the explanation that “foreign direct investment based companies were not permitted to carry out single brand retail and would require government permission”.
“But in order to avoid taking government permission as that carried the risk of exposing and revealing the real ownership and control of the proposed companies, the accused persons in conspiracy had set up nationwide network of companies.
“The Chinese set up an elaborate network in the country in the garb of carrying out sale and after sales services of Vivo Group of companies,” the ED said.
Meanwhile, commenting on the ED’s action, a Vivo spokesperson told IANS, that “Vivo 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”.
The fresh action comes in the wake of the tensions between India and China amid the border row in Ladakh. The ED action comes almost more than a year after it carried out searches at 48 locations across the country belonging to Vivo Mobiles India Private Ltd and its 23 associated companies such as GPICPL and claimed that it has busted a major money laundering racket involving Chinese nationals and multiple Indian companies.
According to the ED, 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 at ROC Delhi. GPICPL was registered on December 3, 2014 at ROC Shimla, with registered addresses of Solan, Himachal Pradesh and Gandhinagar, Jammu.
“The said company was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of Nitin Garg, CA. Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021,” the financial probe agency had said.
The PMLA investigation by ED was initiated by registering a money laundering case on February 3, 2022 on the basis of an FIR registered at the Kalkaji police station in the national capital by the Delhi Police against GPICPL and its Director, shareholders and certifying professionals, etc., on the basis of complaint filed by the Ministry of Corporate Affairs.
The ED’s probe had revealed that the same director of GPICPL, namely Bin Lou, was also an ex-director of Vivo. He had incorporated multiple companies across the country spread across various states, a total of 18 companies around the same time, just after the incorporation of Vivo in the year 2014-15 and further another Chinese national Zhixin Wei had incorporated further 4 companies.
The ED had alleged that these companies are found to have transferred huge amount of funds to Vivo India.
“Further, out of the total sale proceeds of Rs 1,25,185 crores, Vivo India remitted Rs 62,476 crores. i.e, almost 50 per cent of the turnover out of India, mainly to China,” the ED had claimed. “These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India,” it had said.
Following the searches at multiple locations across the country, the agency had seized 119 bank accounts of various entities with gross balance to the tune of Rs 465 crores including FDs to the tune of 66 crores of Vivo India, 2kg gold bars, and cash amount to the tune of approximately Rs. 73 lakhs, the ED had said.
