In an affidavit filed late last week, the federal agency told the Delhi High Court that 22 companies linked to the Chinese company’s Indian unit are under investigation for “suspicious” transfers to China. The agency claimed that the 22 companies are owned by foreign nationals or foreign companies based in Hong Kong. “However, it can be seen that the bulk of the funds were sent overseas to China, which is suspicious and under investigation,” the affidavit said. Vivo has previously said it abides by all local laws.
The ED has drawn a parallel between the incorporation of the 22 companies and Grand Prospect International Communication Pvt Ltd (GPICPL), a Jammu and Kashmir distributor of Vivo, allegedly falsely posing as a subsidiary of Vivo India.
The ED has claimed that GPICPL, already under investigation for money laundering, was floated “on the basis of forged documents”. The agency has claimed that “during the investigation it was found that M/s Vivo followed the same modus operandi in different states of India by involving about 22 companies”.
The agency said a New Delhi-based chartered accountant who facilitated the establishment of GPICPL did the same for Vivo in August 2014.
Additionally, the email address used by GPICPL was [email protected] in the Department of Corporate Affairs filings, which according to the affidavit viewed by ET shows a connection between Vivo and GPICPL.
“These findings give reason to believe that there is a strong connection between M/s GPICPL, a company that was listed on the basis of forged documents, and M/s Vivo,” the ED said. In the data shared by the ED with the Supreme Court, the aforementioned chartered accountant has been shown assisting with incorporation or as a witness in lawsuits related to almost all 22 companies.
To back up its allegations of destabilizing the financial system, the agency has referred to a ruling by the Orissa High Court that branded money laundering in 2020 an act of “financial terrorism”.
Bin Lou, a former director of Vivo, and another Chinese named Zhixin Wei allegedly founded the 22 companies. While Bin Lou founded 18 companies in 2014-15 after founding Vivo India in August 2014, Wei founded four.
The agency has informed the Supreme Court that the two directors of GPICPL, Zhengshen Ou and Zhang Jie, are leaving India 10 days after the Delhi Police registered a First Information Report (FIR) against the company J&K on December 5, 2021 to have. “The Chinese directors, instead of cooperating with Indian law enforcement agencies, fled the country,” the agency said on December 15, 2021. The ED said it registered a money laundering case on February 3.
An analysis of GPICPL’s finances showed it held about 1,487 crore in three accounts with two banks, the agency said. Approximately 1,200 crore of which was donated to Vivo Mobile India Pvt Ltd. transferred.
Earlier this month, Vivo India told the court that ED’s bank account freeze was “joking in nature”. The company’s attorney had claimed that ED was “unable to provide a rational explanation for the freezing” of the accounts.
After ED raided Vivo India and related companies on July 5, the spokesman told ET that the company is working with authorities to provide them with all the information they need. “As a responsible company, we are committed to full compliance with the law,” the person said. During raid operations on July 5, the ED said it had collected “various incriminating documents, invoices and details of huge transactions between GPICPL and Vivo Mobile India Pvt Ltd.”
During the operation, Vivo India staff, including some Chinese nationals, failed to cooperate and attempted to escape, remove and hide digital devices found by the search teams, the ED said. The agency denied that its action was “indiscriminate or created an atmosphere of extreme suspicion,” the company claimed.
In response to Vivo’s assertion that the right to trade is a fundamental constitutional right, the agency said the liberty is granted with respect to lawful trade, occupation and business and “not with respect to a business based on fraud and falsehood.” representation of identity”.
The Delhi High Court on July 13 allowed Vivo India to operate frozen bank accounts if a bank guarantee of €9.5 million was presented within seven working days.
ET was the first company to report on July 12 that Vivo India had asked ED to unfreeze its bank accounts so it could continue its business, claiming that freezing all of its accounts “endangers its existence” in the country.
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