Xiaomi accuses Indian agency of ‘physical violence’ threats | Business and Economy News


Chinese smartphone maker Xiaomi Corp has alleged its top executives were threatened with “physical violence” and coercion during questioning by India’s financial crime agency, according to a court filing seen by Reuters.

Law Enforcement (ED) officials have warned the company’s former Indian chief executive Manu Kumar Jain, current chief financial officer Sameer BS Rao, and their families of the ‘disastrous consequences’ they were not submitting statements the agency wanted, Xiaomi’s May 4 filing noted.

The ED did not immediately respond to a request for comment.

Xiaomi has been under investigation since February, and last week the Indian agency seized $725 million from the company’s Indian bank accounts, claiming it was making illegal money transfers overseas.” under cover of royalties”.

Xiaomi denied any wrongdoing, saying its royalty payments were legitimate. On Thursday, a judge heard from Xiaomi’s lawyers and suspended the Indian agency’s decision to freeze bank assets. The next hearing is scheduled for May 12.

The company alleges intimidation by India’s top law enforcement agency when officials appeared for questioning on multiple occasions in April.

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Jain and Rao have on some occasions been “threatened…with dire consequences including arrest, damage to career prospects, criminal liability and physical violence if they fail to make statements in accordance with the dictates” of the agency. , according to the High Court filing. of Karnataka in the southern state.

The executives “were able to withstand the pressure for a while, [but] they eventually caved under such extreme and hostile abuse and pressure and unwittingly made statements,” he added.

Xiaomi declined to comment citing ongoing legal proceedings. Jain and Rao did not respond to questions from Reuters news agency.

Jain is now global vice president of Xiaomi based in Dubai and is credited with the company’s rise in India, where its smartphones are hugely popular.

Xiaomi was the top smartphone seller in 2021 with a 24% market share in India, according to Counterpoint Research. It also sells other tech gadgets, including smartwatches and televisions, and has 1,500 employees in the country.

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Fight for remittances

Many Chinese companies have struggled to do business in India due to political tensions following a border clash in 2020. India has cited security concerns by banning more than 300 Chinese apps since then and has also tightened standards for Chinese companies investing in India.

Tax inspectors raided Xiaomi’s Indian offices in December. After receiving information from the tax authorities, the ED – which investigates matters such as foreign exchange law violations – began to review Xiaomi’s royalty payments, according to court documents.

The agency said last week that Xiaomi Technology India Pvt Ltd had handed over the foreign currency equivalent of 55.5 billion rupees ($725 million) to overseas entities, even though Xiaomi had use any service” from them.

“Such huge sums in the name of royalties were paid on the instructions of their Chinese parent group entities,” the agency said.

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Xiaomi’s court filing alleges that during the investigation, Indian agency officials “dictated and coerced” Xiaomi India Chief Financial Officer Rao to include a phrase in his statement “under extreme duress.” April 26.

The line read: “I accept that the royalty payments were made by XTIPL in accordance with the instructions of certain persons in the Xiaomi group.”

A day later, on April 27, Rao retracted the statement saying it was “unwilling and made under duress,” according to the filing.

Management issued an asset freezing order on Xiaomi’s bank accounts two days later.

Xiaomi said in a previous statement to the media that it believes its royalty payments “are all legitimate and truthful” and that the payments were made for “licensed technologies and IP addresses used in our Indian version products”. .

Its court filing said Xiaomi was “aggrieved to have been targeted since some of its affiliated entities are based outside of China.”

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