The Ministry of Corporate Affairs has started examining the accounts of more than 500 Chinese companies, a person familiar with the matter recently told Bloomberg. In addition to ZTE and Vivo, these include Xiaomi, Oppo, Huawei Technologies, several Indian entities of Alibaba Group such as Alibaba.com India E-Commerce Pvt. ltd and Alibaba Cloud (India) LLP, the person said, asking not to be identified as the details are private.

This week, ET reported that Indian authorities are investigating local support two Chinese nationals have received to set up a company posing as a subsidiary of smartphone maker Vivo.

Two auditors and a company secretary are already under the investigators’ scanner, insiders said.

The company, Grand Prospect International Communication Pvt Ltd, distributes the products of the Chinese manufacturer Vivo in Jammu & Kashmir. Fake documents were allegedly used to register the company and obtain director identification numbers.

On Tuesday, the Enforcement Directorate searched nearly four dozen locations associated with Vivo and its affiliates, including Grand Prospect. The central authority checks whether letterbox companies have been used for money laundering.

CA’s relieved

The two Chinese are shareholders of Grand Prospect. The company falsely posed as a subsidiary of Vivo and was formed to conduct fraudulent business, according to the deputy registrar’s complaint filed with the police.

An investigation by the Deputy Business Registry for Delhi and Haryana revealed that the two Chinese nationals used the professional address of a chartered accountant in New Delhi. The investigation also allegedly found that the relevant authorities facilitated the establishment of the company by “witnessing” the signatures and documents of the Chinese nationals.

The Company Secretary, Deputy Registrar or Company investigation allegedly found certified processes related to proactive enforcement and compliance with legal requirements under the Companies Act without reviewing them.

No comments from ICAI so far

On June 20, The Hindu reported that the Indian government has recommended disciplinary action against 400 auditors and company secretaries (CSs) for their alleged role in incorporating Chinese letterbox companies into Indian cities by flooding in norms and rules.

The Institute of Chartered Accountants of India (ICAI), the professional body of competent authorities in India, said complaints are dealt with under the Chartered Accountants Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases Rules of 2007 and only after the investigation can be confirmed by the allegation and the number of professionals involved.