Co-founder of Lava arrested in India due to connection to Vivo money laundering case

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

India arrests four individuals on charges related to the Vivo money laundering case, indicative of India's hard-line stance on Chinese companies operating in the South Asian country.

According to Reuters, Financial Times, and Indian Express, India's financial crime agency Enforcement Directorate (ED) arrested four people, including Hari Om Rai, co-founder and managing director of Lava, Chinese national Andrew Kuang, and chartered accountants Nitin Garg and Rajan Malik, alleging the arrests of cheating the government by entering India in a disguised and fraudulent manner to set up an elaborate Chinese-controlled network throughout India and carrying activities prejudicial to the economic sovereignty of India. In addition to opening bank accounts with forged documents, the ED has alleged that Vivo employees were working in India without the necessary visas, a breach of local employment visa rules.

In a statement to the Chinastarmarket, Vivo said it strictly adheres to local laws and regulations. Vivo is closely monitoring the recent investigation and will take all possible legal measures to address it, adding that only one of the four arrested is an employee of Vivo.

The arrests followed similar moves by the Indian government targeting Chinese companies, including freezing nearly US$700 million of Xiaomi's assets and blocking 19 bank accounts linked to Vivo in India on the allegation that Vivo illegally transferred a substantial sum of INR624.76 billion to China for tax evasion.

In addition to the money laundering case involving Vivo, according to sources cited by Mint, India-based Megha Engineering and Infrastructure and BYD have been exploring the possibility of assembling electric vehicles (EVs) in India. However, executives from BYD have faced challenges in obtaining Indian visas for over a year, leading them to conduct meetings in alternative countries such as Nepal, Sri Lanka, and China.

On the other hand, amid the intensifying scrutiny against Chinese companies in India, Xiaomi announced it had partnered with Dixon Technologies to manufacture smartphones, the first time that Xiaomi has outsourced handset manufacturing to an Indian company. It remains to be seen whether Xiaomi's decision will mitigate the scrutiny pressure from the Indian government, which has been criticizing that local manufacturers and distributors did not benefit from the operations of China-based companies in India.