Delhi High Court has allowed Chinese smartphone manufacturer Vivo to operate its bank accounts frozen by the Enforcement Directorate (ED) in relation to a money laundering investigation. Hearing the matter on Wednesday, the court granted relief to the tech major on condition that it submits a bank guarantee of ₹950 crore and maintains ₹250 crore in its accounts.
The single-judge bench of Justice Yashwant Varma has ordered Vivo to furnish the bank guarantee within seven working days. The court has also directed the company to submit details of its bank activities and remittances to the financial probe agency.
The court has also ordered ED to file its reply in the matter within a week, and Vivo to file its reply two days after. The case will now be heard on July 28.
On July 5, ED had raided 48 locations across the country over alleged money laundering by Vivo and 23 related firms, including Grand Prospect International Communication Pvt. Ltd. (GPICPL). The agency had taken cognisance of the first information report (FIR) registered by Delhi Police’s Economic Offences Wing (EOW) against a Vivo distributor in Jammu and Kashmir. ED has claimed that proceeds of crime are to the tune of ₹1,200 crore.
The probe agency had alleged that Vivo India remitted about ₹62,476 crore – almost 50% of its turnover of ₹1,25,185 crore – out of India, mainly to China. These remittances were made in order to disclose huge losses in Indian incorporated companies to avoid payment of taxes in India, it had added
Vivo Mobiles India was incorporated in August 2014 as a subsidiary of Multi Accord Ltd, a Hong Kong based company, registered at Registrar of Companies (RoC), Delhi. GPICPL was registered on December 3, 2014 at Registrar of Companies (RoC), Shimla, with registered addresses of Solan, Himachal Pradesh and Gandhi Nagar, Jammu. GPICPL was incorporated by Zhengshen Ou, Bin Lou and Zhang Jie with the help of Nitin Garg. Bin Lou left India on April 26, 2018. Zhengshen Ou and Zhang Jie left India in 2021.
As per the FIR, GPICPL and its shareholders had used forged identification documents and falsified addresses at the time of incorporation. The allegations were found to be true as the investigation revealed that the addresses mentioned by the directors of GPICPL did not belong to them, but in fact it was a government building and house of a senior bureaucrat, says the probe agency.
ED's investigation revealed that the same director of GPICPL, namely Bin Lou, was also an ex-director of Vivo. He had incorporated multiple companies across the country spread across various states, a total of 18 companies around the same time, just after the incorporation of Vivo in the year 2014-15.
Following the searches against Vivo and its related firms, ED had frozen the Chinese company’s bank accounts. The probe agency had also seized ₹465 crore including fixed deposits (FDs) to the tune of ₹66 crore of Vivo India, 2 kg gold bars, and cash amount aggregating to around ₹73 lakh under the provisions of Prevention of Money Laundering Act, 2002.
The development comes as Directorate of Revenue Intelligence (DRI) under Ministry of Finance detected customs duty evasion of around ₹4,389 crore by Oppo Mobiles India Private Limited. After completion of the investigation, a show-cause notice has been issued to Oppo India, raising customs duty demand equal to the same amount.
