Xiaomi accuses Indian agency of ‘physical violence’ threats | Business and Economy News
Chinese smartphone maker Xiaomi Corp has accused its top executives of facing threats of “physical violence” and coercion during questioning by anti-government authorities. India’s financial crimes, according to court filings obtained by Reuters.
Officials from the Department of Enforcement (ED) have warned the company’s former India executive, Manu Kumar Jain, current CFO Sameer BS Rao, and their families of “serious consequences.” if they fail to submit the statements as desired by the agency, Xiaomi’s May 4 filing states.
ED did not immediately respond to a request for comment.
Xiaomi has been under investigation since February and last week Indian agency seizes 725 million dollars located in the company’s Indian bank account, saying it had made illegal remittances abroad “under the guise of royalties”.
Xiaomi has denied any wrongdoing, saying its royalty payments are legitimate. On Thursday, a judge heard Xiaomi’s lawyers and upheld the Indian agency’s decision to freeze bank assets. The next hearing is set for May 12.
The company is alleged to have been threatened by India’s top enforcement agency when executives showed up for questioning multiple times in April.
Jain and Rao are under certain circumstances “threat…with serious consequences including arrest, damage to career prospects, criminal liability and physical violence if they don’t come forward. declared at the behest of the “agency,” according to records in the High Court of Karnataka in the southern state.
Executives “have been able to resist pressure for a while, [but] they ended up being subjected to such extreme and hostile abuse and pressure and inadvertently made some statements,” it added.
Xiaomi declined to comment, citing pending legal proceedings. Jain and Rao did not respond to queries from Reuters news agency.
Jain is currently the global vice president of Xiaomi based in Dubai and is credited for the company’s growth in India, where its smartphones are hugely popular.
Xiaomi is the top seller of smartphones in 2021 with a 24% market share in India, according to Counterpoint Research. It also sells other technology devices, including smart watches and TVs, and has 1,500 employees in the country.
Competition for remittances
Many Chinese companies have been struggling to do business in India due to the following political tensions a border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then and also tightened regulations on Chinese companies investing in India.
Tax inspectors raided Xiaomi’s offices in India in December. Upon receiving information from the tax authorities, the ED – which investigates matters such as violations of foreign exchange laws – began looking into it. Xiaomi’s royalty payments, court documents show.
The agency said last week that Xiaomi Technology India Pvt Ltd had transferred foreign currency equivalents of 55.5 billion rupees ($725 million) to overseas entities even though Xiaomi “did not provide any services” from surname.
“Such huge amounts of money in the name of royalties were transferred under the instructions of units of their Chinese parent group,” the agency said.
Xiaomi’s court filing alleges that during the investigation, Indian agency officials “directed and forced” Xiaomi India’s CFO Rao to issue a verdict as part of his statement. under extreme duress” on April 26.
The line reads: “I acknowledge the royalty payments were made by XTIPL on instructions from some people in the Xiaomi team.”
A day later, on April 27, Rao retracted the statement saying it was “involuntary and made under duress,” records show.
The board of directors issued an order to freeze assets in Xiaomi’s bank accounts two days later.
Xiaomi has said in an earlier media statement that it believes its royalty payments are “all legal and honest” and that the payments are made for “technologies and IPs”. licensed for use in our Indian version products”.
Their court filing said Xiaomi was “harmed by being targeted because some of its affiliates are based outside of China”.