On Tuesday, October 10, the Patiala House Court in Delhi granted custody of four individuals to the Enforcement Directorate (ED) for their alleged involvement in money laundering in the Vivo Mobiles case. The accused include Hari Om Rai, the MD of Lava International, Chinese national Guangwen Kyang, CA Nitin Garg, and Rajan Malik. The ED had sought a 10-day custody, citing the evasive and non-cooperative behavior of the accused during questioning.
The ED alleges that several Chinese nationals violated their visa conditions by traveling to sensitive areas in Jammu Kashmir and Ladakh. The individuals are accused of being part of a criminal conspiracy, using Indian companies as a front to establish a presence in India, potentially violating Foreign Direct Investment (FDI) norms.
Guangwen Kuang, the arrested Chinese national, is said to have played a key role in creating a network of companies in India under a corporate veil controlled by Vivo China. Bin Lou, a Chinese national, was the founding director of Vivo India and other related entities. These companies were allegedly presented to the public as part of the Vivo Group but had dummy directors and shareholders to conceal Vivo China’s control.
Hari Om Rai and Rajan Malik are accused of assisting Vivo China in setting up the network in violation of FDI norms. Labquest Engineering, owned by Rajan Malik, is alleged to have facilitated this by helping individuals from Vivo China arrange security deposits and office spaces in India.
Vivo Mobiles India is accused of remitting funds from India without showing profits in statutory filings, with Vivo Mobile Communications China responsible for the day-to-day business. Vivo Mobiles India is further accused of transferring half of the sale proceeds to China to evade taxes in India. The ED’s investigation under the Prevention of Money Laundering Act (PMLA) began on February 3, 2022, and included searches at 48 locations, leading to the arrests on October 10.
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