New Delhi: The Enforcement Directorate (ED) has taken significant steps in its ongoing money-laundering investigation involving Chinese smartphone maker Vivo India. This investigation has led to the arrest of three key figures, including a Chinese national, the managing director of Lava International, and a chartered accountant. The accused individuals have been taken into custody, and a court ruling has extended their detention until October 13.
Vivo Executive Arrested
In a major development, the Enforcement Directorate has arrested Chinese national Guangwen Kyang, also known as Andrew Kuang, under the relevant provisions of the Prevention of Money Laundering Act (PMLA). This arrest is a significant move in the investigation targeting Chinese smartphone manufacturer Vivo.
Lava International MD and Others Nabbed
Aside from the arrest of the Chinese national, the ED also apprehended Lava International’s managing director, Hari Om Rai, along with another company executive, Rajan Malik, and a chartered accountant named Nitin Garg. These arrests are linked to their alleged involvement in the embezzlement of funds related to Vivo.
Legal Proceedings
The Enforcement Directorate had sought a 10-day remand for the four accused, but the court has decided to keep them in custody until October 13, pending further investigation.
Vivo’s Response
Vivo India has issued a statement in response to these arrests, expressing concern over the situation. The company reiterated its commitment to ethical principles and legal compliance and indicated that it will explore all available legal avenues to address the matter.
Allegations Against Lava’s MD
During the court proceedings, the ED alleged that Hari Om Rai, the managing director of Lava International, played a role in facilitating fund embezzlement on behalf of Vivo. Rai is accused of helping Vivo establish a network of companies across India during its initial expansion in 2014. He allegedly provided business letters to Vivo’s CEO and other employees to assist them in obtaining visas for India.
Court’s Decision
The court, in its decision to remand the four accused to three days of ED custody, noted the agency’s concerns about their lack of cooperation and deliberate attempts to mislead the investigators. The court emphasized the necessity for custodial interrogation to uncover the deep-rooted conspiracy underlying the alleged offenses under the PMLA.
Rai’s Address to the Court
Notably, Hari Om Rai, the MD of Lava International, addressed the court during the proceedings. However, the company did not respond to queries from ET.
ED Raids and Money Laundering Probe
The ED had previously conducted raids at 44 locations connected to Vivo and its associated entities in July, as part of the broader money laundering investigation against the Chinese company. This probe was initiated following an FIR filed by the Delhi Police in December.
Previous Investigations
It’s worth mentioning that earlier in July 2022, ET reported the investigation into the alleged involvement of two chartered accountants and a company secretary in assisting two Chinese nationals in establishing a company linked to Vivo using forged documents and falsified addresses.
Fraudulent Activities
These individuals had reportedly aided Chinese nationals Zhengshen Ou and Zhang Jie in incorporating a distributor for Vivo in Jammu and Kashmir. The company falsely claimed to be a subsidiary of Vivo and was alleged to be involved in fraudulent activities.
Forgery and Document Falsification
An internal investigation by the Deputy Registrar of Companies, NCT of Delhi and Haryana, revealed that the two Chinese nationals used the professional address of a chartered accountant in Pitampura, New Delhi, to establish the company. The chartered accountant was accused of facilitating the incorporation by “witnessing” signatures and documents.
Further Investigation
The investigation also revealed that the company had been involved in “certain fraudulent activities” and was primarily established for fraudulent purposes. Additional chartered accountants and a company secretary had certified documents and applications to obtain Director Identification (DI) numbers and other documents for the company.
Financial Irregularities in Jammu & Kashmir
In June 2022, the economic offenses wing of the Delhi Police initiated an investigation into Vivo’s Jammu & Kashmir distributor, Grand Prospect International Communication, following the discovery of forged documents and false Indian addresses submitted by at least two Chinese directors associated with the company.
Vivo’s Response to Money Laundering Allegations
In response to these allegations, Vivo India had previously informed the Delhi High Court in July that it had not engaged in money laundering or financial terrorism. The company argued that it had contributed significantly to India’s financial integrity and economic stability. The ED, however, alleged that Vivo India had laundered money as part of an attempt to destabilize India’s financial system.
Ongoing Investigation
The investigation into the distribution network of Vivo and its alleged connections to Chinese entities continues to be a focal point for the investigating agencies.
