NEW DELHI, Could 7 (Reuters) – Chinese language smartphone maker Xiaomi Corp (1810.HK) has alleged its prime executives confronted threats of “bodily violence” and coercion throughout questioning by India’s monetary crime preventing company, in keeping with a court docket submitting seen by Reuters.
Officers from the Enforcement Directorate warned the corporate’s former India managing director, Manu Kumar Jain, present Chief Monetary Officer Sameer B.S. Rao, and their households of “dire penalties” if they didn’t submit statements as desired by the company, Xiaomi’s submitting dated Could 4 said.
After the Reuters story was printed, the Enforcement Directorate issued a press release saying Xiaomi’s allegations have been “unfaithful and baseless” and firm executives had deposed “voluntarily in probably the most conducive atmosphere”.
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Xiaomi has been underneath investigation since February and final week the Indian company seized $725 million within the firm’s India financial institution accounts, saying it made unlawful remittances overseas “within the guise of royalty” funds. learn extra
Xiaomi has denied any wrongdoing, saying its royalty funds have been official.
On Thursday, a decide heard Xiaomi legal professionals and placed on maintain the Indian company’s resolution to freeze financial institution property. The subsequent listening to is ready for Could 12. learn extra
The corporate alleges intimidation by the enforcement company when executives appeared for questioning a number of occasions in April.
Jain and Rao have been on sure events “threatened … with dire penalties together with arrest, injury to the profession prospects, prison legal responsibility and bodily violence if they didn’t give statements as per the dictates of” the company, in keeping with the submitting within the Excessive Courtroom of southern Karnataka state.
The executives “have been ready to withstand the strain for a while, (however) they finally relented underneath such excessive and hostile abuse and strain and involuntarily made some statements,” it added.
In its media assertion, the Enforcement Directorate mentioned it’s a “skilled company with sturdy work ethics and there was no coercion or risk to the officers of the corporate at any level of time”.
Xiaomi declined to remark citing pending authorized proceedings. Jain and Rao didn’t reply to Reuters queries.
Jain is now Xiaomi’s world vp based mostly in Dubai and is credited with Xiaomi’s rise in India, the place its smartphones are massively in style.
Xiaomi was the main smartphone vendor in 2021 with a 24% market share in India, in keeping with Counterpoint Analysis. It additionally sells different tech devices together with good watches and televisions, and has 1,500 workers within the nation.
Many Chinese language corporations have struggled to do enterprise in India resulting from political tensions following a border conflict in 2020. India has cited safety issues in banning greater than 300 Chinese language apps since then and in addition tightened norms for Chinese language corporations investing in India.
Tax inspectors raided Xiaomi’s India places of work in December. On receiving info from tax authorities, the Enforcement Directorate – which probes points reminiscent of international trade legislation violations – began reviewing Xiaomi’s royalty funds, court docket paperwork present.
The company final week mentioned Xiaomi Expertise India Personal Restricted (XTIPL) remitted international forex equal to 55.5 billion rupees ($725 million) to entities overseas despite the fact that Xiaomi had “not availed any service” from them.
“Such enormous quantities within the identify of royalties have been remitted on the directions of their Chinese language dad or mum group entities,” the company mentioned.
Xiaomi’s court docket submitting alleges that in the course of the investigation, Indian company officers “dictated and compelled” Xiaomi India CFO Rao to incorporate a sentence as a part of his assertion “underneath excessive duress” on April 26.
The road learn: “I admit the royalty funds have been made by XTIPL as per the instructions from sure individuals within the Xiaomi group.”
A day later, on April 27, Rao withdrew the assertion saying it was “not voluntary and made underneath coercion”, the submitting reveals.
The directorate issued an order to freeze property in Xiaomi’s financial institution accounts two days later.
Xiaomi has mentioned in a earlier media assertion it believes its royalty funds “are all legit and truthful” and the funds have been made for “in-licensed applied sciences and IPs utilized in our Indian model merchandise”.
Its court docket submitting said Xiaomi is “aggrieved for being focused since a few of its affiliate entities are based mostly out of China”.
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Reporting by Aditya Kalra in New Delhi and Abhirup Roy in Mumbai; modifying by Stephen Coates and Jason Neely
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