The Enforcement Directorate (ED) has filed a charge sheet in its money laundering probe against Chinese phone maker Vivo, alleging that shell companies were used to remit ₹ 1 lakh crore outside India between 2014 and 2021, people familiar with the development said

Those named in the charge sheet, filed before a special court in Delhi on Wednesday, include Hari Om Rai, founder and managing director of Lava International, who is accused of assisting Vivo; Guangwen Kyang alias Andrew Kuang (a Chinese national who allegedly played a key role in Vivo’s money laundering activities), Nitin Garg (chartered accountant who worked for Vivo) and Rajan Malik (statutory auditor of Lava), officials said. Vivo as a company has also been named as an accused in the charge sheet.

They have been charged under Prevention of Money Laundering Act (PMLA).

The federal agency’s probe, which began in 2022, has revealed that the Chinese phone manufacturer had incorporated 19 more companies in various cities after its entry in India in 2014. These companies had Chinese nationals as their directors and/or shareholders and controlled the complete supply chain of Vivo Mobiles in India.

The FDI (foreign direct investment) policy of 2014-15 permitted 100% foreign investment in single brand retail under the government route but for wholesale cash and carry business, 100% FDI was permitted under automatic route, which didn’t require any government approval.

“In order to avoid taking government approval, Vivo China devised a plan whereby they entered India under the garb of wholesale cash and carry business as part of criminal conspiracy to conceal its real ownership, control and nature of activities from Indian government authorities and entered India through automatic route,” ED said in a statement in October.

The agency had raided Vivo’s offices and associate companies in July last year.

The money laundering probe has revealed that Vivo remitted over ₹1 lakh crore outside India since its inception (2014) to some “trading companies” hired by it to create a layer so that the control of Vivo China over these Indian companies does not come to the notice of government authorities.

“While no profit was shown from 2014-15 to 2019-20 in the statutory filings and no income taxes were paid in India, huge sums were siphoned off out of India,” according to ED’s court documents seen by HT.

The probe agency for financial crimes further said that its findings show Chinese control over the Indian entities and that the Chinese ownership and control was concealed from Indian authorities.

The Chinese control over Indian entities, ED said, is reflected from the fact that a single individual – Bin Luo, a Chinese national – was the founding or first director of Vivo India as well as 18 other entities of Vivo. Nitin Garg, a chartered accountant, assisted in incorporation of most associate companies.

A Vivo spokesperson said in a statement in October, “Vivo 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.”

HT has reached out to Vivo for comments on the charge sheet.