Xiaomi accuses emergency service of threats of physical violence during investigation into alleged tax evasion: report


New Delhi: Chinese smartphone maker Xiaomi has alleged its top executives were threatened with “physical violence” and coercion during questioning by the Law Enforcement Directorate (ED), Reuters news agency reported. citing a court record. The report came more than a week after Xiaomi Corp’s assets worth Rs 5,551.27 crore were seized by India’s Financial Crimes Investigation Agency for alleged violation of the provisions of the law. on Foreign Exchange Management (FEMA).Also Read- Xiaomi India Assets Worth Rs 5,551 Crore Seized for Violation of Foreign Exchange Act

ED officials have warned the company’s former Indian chief executive, Manu Kumar Jain, current chief financial officer Sameer BS Rao, and their respective families of ‘disastrous consequences’ if they fail to submit the statements desired by the agency, according to Xiaomi’s filing dated May 4. to the Reuters report. Jain is now Xiaomi’s global vice president based in Dubai. Also Read – Jacqueline Fernandez in trouble again, ED seizes assets worth Rs 7.27 crore in money laundering case involving Sukesh Chandrashekhar

The Law Enforcement Branch has yet to respond to the allegations. Read also – Violence in Jahangirpuri: Delhi court sends first defendant to 8-day custody, 4 others to 14-day custody

Why ED Probe Xiaomi?

Xiaomi has been under investigation since February. On April 29, ED seized $725 million (Rs. royalties”.

Xiaomi, on the other hand, denied any wrongdoing and said its royalty payments were legitimate. On May 5, the Karnataka High Court suspended the ED’s decision to freeze bank assets. The next hearing is scheduled for May 12.

Earlier in December last year, tax inspectors raided Xiaomi’s Indian offices. After receiving information from the tax authorities, the Law Enforcement Branch – which investigates issues such as foreign exchange law violations – began to review Xiaomi’s royalty payments, according to court documents. according to Reuters.

Last week, ED said that Xiaomi Technology India Private Limited (XTIPL) had handed over the foreign currency equivalent of Rs 55.5 crore (USD 725 million) to overseas entities, even though Xiaomi had “no use any service” from them. “Such huge sums in the name of royalties were paid on the instructions of their Chinese parent group entities,” the agency said.

What do Xiaomi’s court documents allege?

The Chinese smartphone maker alleged that it was intimidated by ED when executives were repeatedly questioned in April. Jain and Rao have on some occasions been “threatened…with dire consequences including arrest, damage to career prospects, criminal liability and physical violence if they fail to make statements in accordance with the dictates” of the agency. , according to the High Court filing. from southern Karnataka state, Reuters reported.

Leaders “were able to withstand the pressure for a while, (but) they eventually caved under such extreme and hostile abuse and pressure and unwittingly made statements,” he added.

Xiaomi’s court filing further alleges that during the investigation, Indian agency officials “dictated and forced” Xiaomi India CFO Rao to include a phrase in his statement “under extreme duress.” April 26. The line read: “I admit the royalty payments were made by XTIPL under the instructions of certain people in the Xiaomi group.

A day later, on April 27, Rao retracted the statement saying it was “unwilling and made under duress,” according to the filing. Management issued an asset freezing order on Xiaomi’s bank accounts two days later.

Xiaomi declined to comment citing ongoing legal proceedings. Jain and Rao did not respond to questions from Reuters.

Xiaomi said in a previous statement to the media that it believes its royalty payments “are all legitimate and truthful” and that the payments were made for “licensed technologies and IP addresses used in our Indian version products”. . Its court filing said Xiaomi was “aggrieved to have been targeted since some of its affiliated entities are based outside of China.”

Xiaomi was the top smartphone seller in 2021 with a 24% market share in India, according to Counterpoint Research. It also sells other tech gadgets, including smartwatches and televisions, and has 1,500 employees in the country.

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns by banning more than 300 Chinese apps since then and has also tightened standards for Chinese companies investing in India.

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