The Enforcement Directorate (ED) has arrested four individuals, including the chairman and managing director of Lava International, a Chinese national, and a chartered accountant, as part of a money laundering investigation related to the Chinese phone maker Vivo.
The individuals arrested are:
- Hari Om Rai, founder and managing director of Lava International.
- Guangwen Kyang (alias Andrew Kuang), a Chinese national who allegedly played a key role in Vivo’s money laundering activities.
- Nitin Garg, a chartered accountant who worked for Vivo.
- Rajan Malik, a statutory auditor of Lava.
The ED’s investigation, initiated in 2022 under the Prevention of Money Laundering Act (PMLA), revealed that Vivo, a Chinese phone manufacturer, incorporated 19 additional companies in various Indian cities after its entry into India in 2014. These companies had Chinese nationals as directors and shareholders and controlled the entire supply chain of Vivo mobile phones in India.
The investigation found that Vivo entered India under the guise of a wholesale cash and carry business to conceal its real ownership, control, and activities from Indian authorities and bypass government approval requirements.
The ED had previously conducted raids on Vivo’s offices and associated companies in July the previous year, alleging that Vivo had illegally transferred ₹62,476 crore to China to evade taxes in India.
In the latest developments, the ED disclosed that Vivo had remitted over ₹1 lakh crore out of India since its establishment in 2014 to trading companies hired by Vivo to create a layer of separation, making it difficult for government authorities to detect the control of Vivo China over these local firms.
The investigation revealed that although no profit was reported in statutory filings from 2014-15 to 2019-20 and no income taxes were paid in India, significant sums were siphoned out of the country.
The ED’s court documents indicated that the network of Vivo companies communicated through various Chinese applications, and despite operating in India, their data was not maintained within the country but on servers in China.
The agency claimed that the findings showed complete Chinese control over the Indian entities and that the Chinese ownership and control were concealed from Indian authorities, suggesting a well-planned multi-layered criminal conspiracy.
For instance, a single individual, Bin Luo, a Chinese national, was the founding director of Vivo India and 18 other entities of Vivo. Hari Om Rai, along with Rajan Malik, was accused of aiding in setting up a Chinese-controlled network across India.
The ED also alleged that various Chinese nationals had been traveling across India, including sensitive regions like Jammu and Kashmir and Ladakh, in violation of Indian visa conditions.
Vivo issued a statement expressing deep concern over the arrests and stated that they would explore all available legal options.
By FCCT Editorial Team
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