Vivo in dock for 'misleading govt, banks', phone firm's execs likely to be summoned

The Enforcement Directorate (ED) raided at least 44 locations of Chinese smartphone manufacturer Vivo and entities linked to it as part of a money-laundering probe.

The agency will likely summon executives of the company after gathering evidence, people in the know said. The ED may also look at whether look-out circulars needed to be issued against any executives.

The ED launched the probe after the Delhi Police registered an FIR based on a complaint that accused a Vivo-linked entity of "misleading government authorities and banks", the people said.


On June 11, ET reported that the economic offences wing of the Delhi Police was investigating Vivo's Jammu & Kashmir distributor, Grand Prospect International Communication, after the corporate affairs ministry found at least two Chinese directors of it submitted forged documents and bogus Indian addresses.

Increased Scrutiny of Chinese Cos
The ED is expected to probe if shell companies such as the J&K distributor were used to launder money, including for diversion of funds to foreign shores.

Vivo said it is cooperating with the authorities to provide them with all the required information. "As a responsible corporate, we are committed to be fully compliant with laws," a spokesperson told ET.

India has increased the scrutiny of Chinese companies and their activities since the Galwan Valley border clashes in 2020. In another alleged money-laundering case against a Chinese smartphone company, the ED had ordered seizing assets worth more than Rs 5,500 crore of Xiaomi, accusing it of making illegal payments to third parties abroad under the guise of royalties. The company had appealed against the seizure order and the Karnataka High Court on Tuesday directed the competent authority - the chief commissioner of customs, Chennai, in this case - to decide on its petition in 60 days. The court in the interim stayed the ED seizure order.

On Tuesday, raids were carried out at premises of Vivo and associated companies in Uttar Pradesh, Madhya Pradesh, Bihar, Delhi, Meghalaya and a few southern states, said people in the know. The manufacturing and distribution units and other entities of Vivo were raided.

These included distributors such as Grand Prospect, Joinmay Electronics (Mumbai), Unimay Electronic (Nagpur), Junwei Electronic (Maharashtra), Rui Chuang Technologies (Ahmedabad) and Fangs Technology (Chennai).

The Delhi Police registered the FIR against Grand Prospect based on a complaint from the deputy registrar of companies for Delhi and Haryana. The formal police complaint was filed after the Registrar of Companies (RoC), which is part of the corporate affairs ministry, conducted an investigation on its part.

RoC's complaint, filed on December 4, said the distributor projected itself as a subsidiary of Vivo China and submitted fake addresses for Chinese shareholders Zhengshen Ou and Zhang Jie in official company records, as reported earlier by ET. The company, though, was not reported to be a subsidiary of Vivo in official records.

The complaint, reviewed by ET, said: "On further inquiry, three Chinese deep cover resident agents revealed elements of forgery that the documents submitted by its two Chinese shareholders were either forged or based on falsified addresses." It also named a chartered accountant who allegedly helped file the documents.

According to the complaint, which is part of the FIR, RoC's probe had found "certain fraudulent activities" and it appeared that "this company has been incorporated to conduct fraudulent business". The RoC said the certifying professionals knew about the false information and fake documents about the two Chinese directors when filing those with the ministry. It said one of the directors, Zhang, filed returns with the ministry and opened a bank account using a fake driving licence for address proof.

Intelligence agencies had forwarded the reference to various authorities including the ministry for taking necessary action, the FIR said.