The Patiala House Court in Delhi on Tuesday, October 10, granted the custody of four accused individuals to the Enforcement Directorate (ED) for alleged money laundering in the Vivo Mobiles case. Among those remanded to ED custody are Hari Om Rai, the MD of Lava International, Chinese national Guangwen Kyang, CA Nitin Garg, and Rajan Malik. Notably, the ED had sought custody of these four individuals for a period of 10 days, citing their evasive and non-cooperative behavior during questioning.

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The ED further alleged that several Chinese nationals have violated their visa conditions by traveling to sensitive areas in Jammu and Kashmir and Ladakh. The probe agency have accused the individuals involved in a criminal conspiracy, purportedly using Indian companies as a front to establish a presence in India, potentially violating Foreign Direct Investment (FDI) norms.

The probe agency submitted that Guangwen Kuang, the arrested Chinese national, is said to have played a key role in creating a network of companies in India under a corporate veil, which were controlled by Vivo China.

A Chinese national Bin Lou was the founding director in Vivo India, GPICPL (Grand Prospect International Communications) and other related entities, ED said, adding that these companies were presented to the public as part of the Vivo Group but allegedly had dummy directors and shareholders to conceal Vivo China's control.

Hari Om Rai and Rajan Malik are accused of assisting Vivo China in setting up this Chinese-controlled network in violation of FDI norms, as per the probe agency, which further informed the court that Labquest Engineering, owned by Rajan Malik, is alleged to have facilitated this by helping individuals from Vivo China arrange security deposits and office spaces in India. Additionally, Labquest Engineering is accused of allowing Lava International employees to execute lease deeds for office spaces.

Vivo Mobiles India is accused of remitting funds from India without showing profits in statutory filings from 2014-15 to 2019-20, with Vivo Mobile Communications China being responsible for the day-to-day business of Vivo India, as part of a well-crafted criminal conspiracy to circumvent legal compliances.

Vivo Mobiles India is further accused of transferring half of the sale proceeds, totaling Rs. 1,25,185 crores, to China in an attempt to evade taxes in India. Multiple companies were allegedly incorporated for the purpose of transferring funds to China.

Notably, the ED's investigation under the Prevention of Money Laundering Act (PMLA) began on February 3, 2022, and included searches at 48 locations, including the premises of Vivo Mobiles India and 23 associated companies. The probe agency conducted raids on October 9, and arrested the four executives Vivo Mobiles India, a day later on Tuesday, October 10.