The Enforcement Directorate (ED), the country’s financial crime agency arrested four executives belonging to Chinese smartphone brands including one Chinese national working for Vivo in a case of alleged money laundering.
Broader background
This adds to the legal troubles of the company in India especially in the backdrop of Sino-Indian tensions relating to border disputes and subsequently India’s scrutiny of Chinese businesses and investment.
The company is owned by China’s BBK Electronics, which also operates brands such as Oppo and Realme in India.
Vivo is the second biggest smartphone brand in India with a 17% market share in shipments after Samsung.
Chinese presence in India
Relations between the two countries grew worse since a 2020 military clash on the disputed Himalayan border in which 20 Indian soldiers and four Chinese troops were killed.
Since then, India has banned hundreds of Chinese apps including TikTok, citing national security concerns, and also tightened scrutiny on investments from China.
For example, carmaker BYD’s recent bid to invest $1 billion to build electric cars and batteries in India faced increased scrutiny from New Delhi, forcing the carmaker to drop its plans.
Vivo said it “firmly adheres to its ethical principles and remains dedicated to legal compliance. The recent arrest deeply concerns us. We will exercise all available legal options”.
The current case
Four Vivo employees had been arrested, but during a court hearing lawyers said only one Vivo employee, a Chinese national identified in legal papers as Guanwen Kuang, was arrested.
The ED’s counsel, Manish Jain, sought 10 day custody for the arrested individuals, but the judge ordered only three days.
2022 case
The executives were arrested in relation to an ongoing 2022 case where the ED raided Vivo’s offices and accused it of money laundering.
In 2022, the ED blocked 119 bank accounts linked to Vivo’s India business.
The police also formally accused Vivo of helping transfer funds illegally to a news portal under investigation on charges of spreading Chinese propaganda.
Vivo has denied the allegations.
Previously it said it cooperated with authorities to provide them with all required information and was “committed to be fully compliant with laws”.
