Vivo's money laundering an attempt to destabilise India's financial system, threatens sovereignty, integrity: ED to Delhi High Court

Chinese smartphone manufacturer Vivo’s act of alleged money laundering is not merely an economic offence but an attempt to destabilise the country’s financial system, thereby, threatening the integrity and sovereignty of India, the Enforcement Directorate (ED) told the Delhi High Court last week. .The agency said that the Orissa High Court has held that money laundering is an act of ‘financial terrorism’ and the present case falls into that category.“…the present case is not a case of mere commission of an economic offence but has been carried out as an attempt to destabilize the financial system of the country and also to threaten the integrity and sovereignty of the nation,” ED said in a counter affidavit filed on July 21. .ED’s response came in a petition by the Chinese smartphone manufacturer seeking permission to allow it to operate its bank accounts.The Chinese company had approached the High Court after ED passed an order on July 5 through which all its bank accounts were frozen.ED had conducted searches at several locations related to Vivo and its associated companies like Oppo and Xiaomi in relation to a money laundering case.The agency took cognisance of a First Information Report (FIR) registered by the Delhi Police's Economic Offences Wing against a Vivo distributor based in Jammu and Kashmir.The Delhi High Court had, earlier this month, allowed Vivo to operate its bank accounts on the condition that it furnished a bank guarantee of ₹950 crores and maintains ₹250 crores in its accounts..The agency in its counter affidavit said that there are 22 companies that it is investigating and these firms had transferred huge amounts of funds to Vivo India.“Further, out of the total sale proceeds of Rs. 1,25,185 crores, Vivo India remitted Rs. 62,476 crores. i.e, almost 50°/o of the turnover out of India, mainly to China. These remittances were made in order to disclose huge losses by these companies to avoid payment of taxes in India,” the affidavit said.These companies are held either by foreign nationals or foreign entities based in Hong Kong, the response said..Soon after an FIR was registered by the Delhi Police in December 2021, the Chinese directors of the GPICPL – a Jammu and Kashmir based distributor of Vivo – fled the country instead of cooperating with authorities.GPICPL is alleged to have forged identification documents and falsified addresses at the time of its incorporation.ED said that ₹1,487 crores were credited into GPICPL’s accounts and nearly ₹1,200 crores of it have been transferred to Vivo which shows that there is a close nexus between the two..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.