Vivo money laundering case: ED moves Delhi High Court against release of interim CEO, 2 others

New Delhi: The Enforcement Directorate on Tuesday moved the Delhi High Court challenging the trial court's order directing the release of three accused, including the interim CEO of Chinese smartphone maker VIVO, and others in a money laundering case.

The trial court last week allowed the plea moved by Hong Xuquan, Harinder Dahiya and Hemant Munjal to challenge their arrest and subsequent custody in a money laundering case and directed their immediate release.

The trial court while passing the direction noted that the accused were not produced before the court within 24 hours of the arrest, hence their "custody was illegal".

The three arrested accused had claimed that they were arrested on December 21 and not on December 22 as recorded by the ED. They had moved an application challenging the arrest and declaring it illegal.

On Saturday last week, the accused were produced before the trial court after the expiry of custodial remand. The ED sought their judicial custody and claimed that they were arrested on December 22.

The accused, who were arrested by the Enforcement Directorate were Hong Xuquan alias Terry, interim CEO of VIVO India; Harinder Dahiya, Chief Financial Officer of VIVO India and Hemant Munjal, VIVO’s consultant.

Advocates Manish Jain and Simon Benjamin appeared for the Enforcement Directorate in the matter and Senior Advocates Siddharth Aggarwal and Arvind Nayyar appeared for the accused persons in the matter.

In this case, the ED arrested four accused in October, including a Chinese national and the MD of Lava International.

Recently, the Patiala House Court of Delhi took cognizance of a prosecution complaint (chargesheet) filed by the ED in connection with a Prevention of Money Laundering Act (PMLA) case related to the Chinese mobile company Vivo involving Chinese national Guangwen Kuang, Lava International's MD Hariom Rai, Nitin Garg and Rajan Malik under the different sections of the Money Laundering Act.

According to the ED chargesheet, VIVO India Company was also named as an accused in the matter of allegedly cheating the Government of India. It also stated that the company has set up an intricate network in India.

According to the ED, certain Chinese shareholders of Grand Prospect International Communication Private Ltd incorporated the company based on forged identification documents and falsified addresses.

During the inquiry, certain fraudulent activities were found by the Ministry of Corporate Affairs.

The said company was not reported as a subsidiary of Vivo in the official records, whereas the said company publicly projects itself to be a subsidiary of Vivo, said ED.

ED further alleged that Director and shareholder Zhang Jie used a false driving licence to apply for a Director Identification Number (DIN) for giving his Shillong address and also used his fake driving licence to open the bank account.

With the allegations of cheating, an FIR in Police Station Kalkaji, South East Delhi, was registered under sections 417/120B/420 of IPC and another FIR was also registered under sections 417/420/468/471/120B of IPC by the Economic Offence Wing, Delhi Police, based on the complaint filed by Manjit Singh, the then Deputy Registrar of Companies, Ministry of Corporate Affairs, NCT of Delhi.

ED further alleged that soon after the incorporation of Vivo India, 19 more companies, including GPICPL, were incorporated across India, completely controlled by Chinese nationals.

The accused, Bin Luo, was the founder and first director of Vivo India, GPICPL and all other 18 entities at the time of their incorporation and the accused, Nitin Garg, had assisted in the incorporation of most of the companies of Vivo Group.

According to the Enforcement Directorate, raids were on the premises of the accused on October 9 and seized cash amounting to more than Rs 10 lakhs and arrested four accused, who have been identified as Guangwen Kyang alias Andrew Kuang, a Chinese national, Hari Om Rai, the MD of Lava International, Rajan Malik, and Nitin Garg, a Chartered Accountant.

The probe revealed that the PMLA investigation by ED was initiated by registering a money laundering case on February 3, 2022.