ED Cracks Down on Alleged Money Laundering in Vivo Mobiles; Lava International MD Arrested

In a significant development in the technology industry, the Patiala House Court in Delhi has granted custody to the Enforcement Directorate (ED) for four accused individuals, including Hari Om Rai, the Managing Director of Lava International. This arrest is a part of the ongoing investigation into alleged money laundering in the Vivo Mobiles case.

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In a significant development in the technology industry, the Patiala House Court in Delhi has granted custody to the Enforcement Directorate (ED) for four accused individuals, including Hari Om Rai, the Managing Director of Lava International. This arrest is a part of the ongoing investigation into alleged money laundering in the Vivo Mobiles case.

The individuals in question, namely Hari Om Rai, Chinese national Guangwen Kyang, CA Nitin Garg, and Rajan Malik have been remanded to ED custody for a period of 10 days. The ED cites their evasive and non-cooperative behavior during questioning as the reason for seeking their custody.

The ED's investigation has unveiled a web of allegations, including the violation of visa conditions by several Chinese nationals who traveled to sensitive areas in Jammu Kashmir and Ladakh. The probe agency accuses these individuals of engaging in a criminal conspiracy, using Indian companies as a front to establish a presence in India, potentially violating Foreign Direct Investment (FDI) norms.

Furthermore, the ED claims that the arrested Chinese national, Guangwen Kuang, played a pivotal role in creating a network of companies in India under a corporate veil. These companies were controlled by Vivo China, and their existence was presented to the public as part of the Vivo Group. However, they allegedly had dummy directors and shareholders to conceal Vivo China's control.

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The investigation agency claims that Hari Om Rai and Rajan Malik helped Vivo China establish this Chinese-controlled network, which is against FDI regulations. Rajan Malik's Labquest Engineering is accused of facilitating this by helping Vivo China personnel set up security deposits and office space in India. Additionally, Labquest Engineering is charged with enabling Lava International staff members to sign office leasing agreements.

Vivo Mobiles India is accused mostly of sending money out of India without disclosing any earnings in statutory filings from 2014–15 to 2019–20. This is thought to have been planned by Vivo Mobile Communications China as part of a criminal plot to avoid following the law. Vivo Mobiles India is accused of transferring half of the sales earnings, or Rs. 1,25,185 crores, to China in an effort to avoid paying taxes in India. It is claimed that several businesses were set up with the aim of sending money to China.

This investigation, carried out under the Prevention of Money Laundering Act (PMLA), began on February 3, 2022. It included searches at 48 locations, including the premises of Vivo Mobiles India and 23 associated companies. The ED conducted raids on October 9, leading to the arrest of the four executives from Vivo Mobiles India on Tuesday, October 10.