“Vivo China, through Vivo India, created a mesh of companies under a corporate veil. On piercing the corporate veil, the real beneficial ownership and control of all these entities is revealed i.e. all the state distributor companies are controlled by Vivo India which in turn was controlled by Vivo China,” notes the chargesheet filed by the Enforcement Directorate against Vivo China, Vivo India and other Indian and Chinese nationals.
According to the chargesheet, multiple entities under the control of Vivo China resorted to using forged identity documents to acquire wrongful gains for themselves “to the detriment of Indian Laws and economic sovereignty of the country.”
In the agency’s words, the entry of Chinese Nationals, who had come to India had entered using Visas which were in gross violation of Visa rules of India. This, according to the agency, was arranged and facilitated by Vivo China by issuing false documents.
The chargesheet alleged that Vivo China was the ultimate controller and beneficial owner of Vivo India and its distributor companies. The Enforcement Directorate in its charge sheet also relied on emails exchanged between Hari Om Rai (Lava MD) and Shen Wei, CEO of Vivo China and stated that Wei was the “decision maker” for Vivo China and Vivo India.
“The email communications retrieved during the investigation clearly establish the fact that the whole setup of Vivo group companies was coordinated and directed by Vivo China with an intent to cheat the Indian Government Authorities and to circumvent various Laws to cause undue gain for itself,” noted the chargesheet.
According to the Investigating Agency, invitation letters were issued to Chinese Nationals by Lava International on the request of Shen Wei. The ED alleged that these Chinese nationals were pivotal in creating a ‘mesh of companies under a corporate veil’ which was used for siphoning funds outside of India.
There are 48 accused in the case according to the ED – 32 entities and 16 individuals. It was alleged in the chargesheet that a criminal scheme was devised by Vivo China through its employees Ye Liao, Liu Hao, Xu Daohe, Guangwen Kuang and others including Bin Luo, Hari Om Rai, Rajan Malik, Nitin Garg and Draphant Consultants Private Limited for incorporation of multiple companies all over India – all of which had dummy directors and fictitious shareholders.
It was further alleged that Vivo China fraudulently “established a complex centrally controlled structure all over the country under the corporate veil of Vivo India and concealed the true nature of their ownership and control.” The complex corporate structure was used by Vivo China to acquire proceeds of crime over Rs. 20,241 crores.
Despite suffering losses, the companies were able to spend lavishly on advertisements because the expenses were ultimately borne by Vivo China, the agency. “Further, these advertisements and endorsements by celebrities gave a colour of legitimacy to these companies and created an element of ‘credibility’ before the general public”, alleged the ED represented by Senior Counsels Manish Jain and Simon Benjamin.
Vivo India siphoned huge amounts of funds to their overseas trading companies under “the garb of imports” alleged the Investigating agency. These overseas companies were also the control of Vivo China according to the agency.
Other than Vivo, the chargesheet also defined the role of others in the money laundering. Chartered accountant Nitin Garg for instance allegedly incorporated 19 companies linked to Vivo India which were acting on the behest of Vivo China. Rajan Malik, CA and Owner of labquest Engineering Pvt. Ltd had helped in opening bank accounts of the various distributor companies. Finally, Hari Om Rai had allegedly, along with helping Chinese individuals acquire office spaces, had also facilitated Visa applications for some of the employees of Vivo China.
While seeking bail, the Lava MD had alleged that mere facilitation of Visas doesn’t bring him into the fold of criminality. Rai also alleged in his bail application that the role of ED must be limited to finding out about the money trail and that grant of visas and other such related aspects do not fall under the purview of the agency.
