ED gets 3-day custody of top Vivo India execs

Vivo India’s interim chief executive officer (CEO) Hong Xuquan, chief financial officer Harinder Dahiya and consultant Hemant Munjal were arrested by Enforcement Directorate (ED) on charges of money laundering and remanded to custody by a sessions judge in Patiala House Court for three days.

The order was issued on the grounds that the executives held critical positions, played a crucial role in acquiring ₹20,241 crore as proceeds of crime, and that the executives were not cooperating with the authorities. Interim CEO Hong Xuquan was cited as a witness in the previous complaint filed by the enforcement body earlier this month. ED said the custodial interrogation of the three accused was required for tracing and determining the money trail of the proceeds of crime. Mint has seen a copy of the order issued by the court.

ED cited the involvement of Dahiya for concealing beneficial ownership of Vivo India and that the person was aware of the complex structure created by Vivo China with an intent to siphon off funds out of the country.

The court also directed ED to conduct an inquiry into claims by the accused that the three executives have been in ED’s custody since 21 December.

“We are deeply alarmed by the current action of the authorities. The recent arrests demonstrate continued harassment and as such induce an environment of uncertainty amongst the wider industry landscape. We are resolute in using all legal avenues to address and challenge these accusations,” a Vivo spokesperson said in a statement on Sunday.

The high-profile arrests follow the arrests of four industry executives in October, including Lava International managing director Hari Om Rai, chartered accountants Nitin Garg and Rajan Malik, and Chinese national Guangwen Kyang, alias Andrew Kuang, allegedly associated with wrongdoings by the Chinese smartphone maker in India. The four executives are in judicial custody. ED filed a chargesheet following their arrests on 6 December and complaint that was filed before a special court under the criminal sections of the Prevention of Money Laundering Act (PMLA).

The Indian agency raided Vivo India and associated persons in July last year, on the grounds that the company was part of the money-laundering racket involving Chinese nationals and multiple Indian companies. ED also alleged that ₹62,476 crore was “illegally” transferred by Vivo India to China to avoid payment of taxes in India.

The agency had also told the court that ₹1.07 trillion was remitted outside India by Vivo to some trading companies controlled by its Chinese parent, according to a Reuters report on 13 October.

At that time, the company said it “firmly adheres to its ethical principles and remains dedicated to legal compliance”.

Chinese firms have been under the scanner of the probe agency since 2020 when Delhi tightened curbs on incoming investment and banned hundreds of Chinese apps following border clashes.