You are here: Home » Companies » News
'Guest-first policy': For Prithvi Raj Singh 'Biki' Oberoi, quality tops
SJVN bags 90 MW floating solar project worth Rs 585 crore in Madhya Pradesh
Business Standard

Xiaomi accuses ED of 'physical violence' threats during forex investigation

The company alleges intimidation by India's premier enforcement agency when executives appeared for questioning multiple times in April.

Topics
Xiaomi | Enforcement Directorate | Forex

Reuters 



Xiaomi
Xiaomi was the leading smartphone seller in 2021 with a 24% market share in India

Chinese smartphone maker Corp has alleged its top executives faced threats of "physical violence" and coercion during questioning by (ED), according to a court filing seen by Reuters.

Officials from ED warned the company's former India managing director, Manu Kumar Jain, current Chief Financial Officer Sameer B.S. Rao, and their families of "dire consequences" if they did not submit statements as desired by the agency, Xiaomi's filing dated May 4 stated.

The did not immediately respond to a request for comment.

has been under investigation since February and last week ED seized $725 million lying in the company's India bank accounts, saying it made illegal remittances abroad "in the guise of royalty" payments.

has denied any wrongdoing, saying its royalty payments were legitimate. On Thursday, a judge heard Xiaomi lawyers and put on hold the Indian agency's decision to freeze bank assets. The next hearing is set for May 12.

The company alleges intimidation by India's premier enforcement agency when executives appeared for questioning multiple times in April.

Jain and Rao were on certain occasions "threatened ... with dire consequences including arrest, damage to the career prospects, criminal liability and physical violence if they did not give statements as per the dictates of" the agency, according to the filing in the High Court of southern Karnataka state.

The executives "were able to resist the pressure for some time, (but) they ultimately relented under such extreme and hostile abuse and pressure and involuntarily made some statements," it added.

The Xiaomi spokesperson said the matter is under the consideration of court of law and thus refused to comment on the matter further.

"We reserve our rights in all respects and will take steps as we may be advised to safeguard our reputation," the spokesperson added.

Jain is now Xiaomi's global vice president based out of Dubai and is credited for Xiaomi's rise in India, where its smartphones are hugely popular.

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

FIGHT OVER REMITTANCES

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

Tax inspectors raided Xiaomi's India offices in December. On receiving information from tax authorities, the - which probes issues such as foreign exchange law violations - started reviewing Xiaomi's royalty payments, court documents show.

The agency last week said Xiaomi Technology India Private Limited (XTIPL) remitted foreign currency equivalent of 55.5 billion rupees ($725 million) to entities abroad even though Xiaomi had "not availed any service" from them.

"Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities," the agency said.

Xiaomi's court filing alleges that during the investigation, Indian agency officials "dictated and forced" Xiaomi India CFO Rao to include a sentence as part of his statement "under extreme duress" on April 26.

The line read: "I admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group."

A day later, on April 27, Rao withdrew the statement saying it was "not voluntary and made under coercion", the filing shows.

The directorate issued an order to freeze assets in Xiaomi's bank accounts two days later.

Xiaomi has said in a previous media statement it believes its royalty payments "are all legit and truthful" and the payments were made for "in-licensed technologies and IPs used in our Indian version products."

Its court filing stated Xiaomi is "aggrieved for being targeted since some of its affiliate entities are based out of China".

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, May 07 2022. 12:43 IST

.