Chinese mobile maker, Xiaomi, has been caught in an illicit act of money laundering by the Enforcement Directorate (ED). The Indian subsidiary of the mobile giant, Xiaomi Technology India Private Limited, has allegedly violated the Indian Foreign Exchange Laws, due to which the financial crime watchdog has seized its assets worth Rs. 5,551 Cr from its bank accounts.
The mobile giant is a trader and distributor of mobile phones in India and commands a major chunk of the segment under the brand name MI. The company started its operations in India in 2014 and started remitting the money in 2015.
The assets were seized under the Foreign Exchange Management Act (FEMA) after an investigation was launched against the company in February. A probe found the smartphone maker had made illegal remittances to foreign entities – including one Xiaomi group entity – by passing them off as royalty payments.
The company has, however, claimed that all its operations “are firmly compliant” with local laws and regulations. ED had also questioned Xiaomi’s Global Vice President, Manu Kumar Jain earlier in April.
Investigations revealed that the company had not availed any service from the three foreign-based entities to whom such amounts have been transferred. Apparently, the indecorous act was carried out on the instructions of their Chinese parent-group entities.
Too long? Here’s a one-liner: Xiaomi India’s assets worth Rs. 5,551 Cr have been seized by ED over violations of the Indian forex law; alleged “illegal remittances” were being sent abroad by the Chinese firm.