Accused of threats to Xiaomi Execs, the enforcement department hits back: 10 points -by Ecork

Xiaomi Corp claims its top executives have faced threats of ‘physical violence’ in India

New Delhi:
The Enforcement Directorate has asked the court to re-freeze Rs 5,551 crore in Xiaomi Corp’s Indian bank accounts while investigating money transfers by the Chinese smartphone giant.

Here’s the 10-point cheat sheet for this big story:

  1. The Enforcement Department confiscated the funds, saying that Xiaomi had illegally transferred funds abroad to three entities, including one in the Xiaomi group, and described them as payments “under the guise of a royalty.” But the court suspended this decision after Xiaomi challenged it.

  2. Xiaomi Corp alleged that its top executives faced threats of “physical violence” and coercion while being questioned by the Enforcement Directorate.

  3. Officials from the Execution Department warned the company’s former managing director in India, Manu Kumar Jain, and current CFO Sameer B.S. Rao, and their families of “serious consequences” if they did not provide the data as required by the agency, according to a Xiaomi file dated May 4, according to Reuters.

  4. Mr. Jain and Mr. Rao have on certain occasions been “threatened… with dire consequences including arrest, damage to employment prospects, criminal liability and physical violence if they do not testify in accordance with the dictates” of the agency, according to the filing in Karnataka High Court.

  5. The Enforcement Directorate has denied Xiaomi India’s allegations that the investigation agency forced its officials to make statements in the alleged illegal transfers case.

  6. The Enforcement Directorate said the statements were “crossed out by them on the basis of documents/information provided by the company during the investigation. Their statements are corroborated by the written responses provided to the ED and the recorded material.”

  7. Xiaomi has been under investigation since February, and the enforcement department in late April confiscated Rs 5,551 crore in the company’s bank accounts in India, saying it had made illegal transfers abroad “under the guise of royalties”.

  8. Xiaomi has denied any wrongdoing, saying the royalty payments were legitimate. Then a judge heard Xiaomi’s lawyer and halted the enforcement department’s decision to freeze the bank’s assets. The next meeting was scheduled for today.

  9. Mr. Jain is now the Global Vice President of Xiaomi and is based in Dubai, and is credited with the rise of Xiaomi in India, where its smartphones are very popular.

  10. Xiaomi was the leading smartphone vendor in 2021 with a 24 percent market share in India, according to Counterpoint Research. Many Chinese companies have struggled to do business in India due to political tensions that followed the border clash in 2020. India has cited security concerns in banning more than 300 Chinese apps since then, and has also tightened standards for Chinese companies investing in India.

With input from Reuters

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