Explained: Why has the ED raided Vivo, what was revealed?

The Enforcement Directorate (ED) raided more than 40 places across India on Tuesday and Wednesday in a money-laundering case against Chinese smartphone company Vivo and its 23 related firms.

According to news agency Reuters, the ED has blocked 119 bank accounts linked to Vivo's India business which were holding 4.65 billion rupees ($58.76 million).

What is the case against Vivo?

According to News18, the ED conducted searches at the places related to Vivo and associated companies, including Xiaomi and Oppo, in a money laundering case.

It took cognisance of a recent Delhi Police (economic offences wing) FIR against a distributor of the agency based in Jammu and Kashmir where it was alleged that a few Chinese shareholders in that company forged their identity documents.

The ED suspects this alleged forgery was done to launder illegally generated funds using shell or paper companies and some of these “proceeds of crime" were diverted to stay under the radar of Indian tax and enforcement agencies.

What was revealed in the raids?

The ED on Thursday said the Indian arm of Chinese smartphone maker Vivo “remitted" almost 50 per cent of its turnover, which is Rs 62,476 crore, mainly to China in order to avoid paying taxes here.

The federal probe agency also said it has seized funds worth Rs 465 crore kept in 119 bank accounts by various entities, Rs 73 lakh cash and 2 kg gold bars after its pan-India raids that were launched early this week on July 5 against Vivo Mobile India Pvt. Ltd. and its 23 associated companies.

According to the ED, they have evidence that Vivo officials used forged documents while incorporating the companies.

As per an NDTV report, the ED alleged that "employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and tried to abscond, remove and hide digital devices which were retrieved by the search teams."

Not the first time Chinese companies have been under the scanner

In April this year, the ED seized deposits worth Rs 5,551 crore of Vivo's rival Xiaomi India, another Chinese smartphone giant, for allegedly violating foreign exchange rules.

Premises of a number of these Chinese smartphone companies including Xiaomi, Oppo and Vivo, their distributors and linked associates were raided across the country by the I-T department in December last year and it later claimed to have detected alleged unaccounted income worth over Rs 6,500 crore due to violation of the Indian tax law and regulations.

With inputs from agencies

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