'Very concerned about arrest of top Lava executive': MoS IT Rajeev Chandrasekhar

Minister of State for Information Technology Rajeev Chandrasekhar said that the recent arrest of a top Lava International Ltd executive earlier this week is a matter of concern given that the phone-maker is a leading brand in India.

Hari Om Rai, co-founder, chairman and managing director of Lava International, was arrested on Wednesday along with three others associated with China-based Vivo over money-laundering charges.

“We are obviously very concerned about it. We do not know all the facts, but Lava as a company has been an Indian champion in the important and growing smartphone segment, where India is now becoming one of the world’s largest producers of smartphones. As a brand, we hold Lava to be a very important participant in the smartphone ecosystem, and while I do not know all the facts of it, I hope this is rapidly looked into, and that the right thing is done by Lava and Rai," Chandrasekhar said on Thursday on the sidelines of an event.

He added that concerns around money laundering also led to crackdowns on the online gaming sector, which saw the influx of “some bad actors".

The Enforcement Directorate (ED) said that Vivo officials had approached Rai to help them establish their business in India. Rai was offered an initial funding of Rs 3.17 crore for setting up offices and residential accommodation of Chinese national of Vivo Mobile India Pvt Ltd and its state distributors via Labquest Engineering Private Limited.

ED has alleged that Vivo reportedly transferred remittances over Rs 1 lakh crore outside India to “trading companies” so that it couldn’t be noticed by the Government of India. It was noted by the agency that zero profits were shown from 2014 to 2020 and no income taxes were paid to India.

In its remand application submitted on Tuesday, the ED said that the accused had cheated the government by entering India in a “disguised and fraudulent manner" to set up an elaborate Chinese-controlled network throughout the country… carrying out activities prejudicial to the economic sovereignty of India.

Lava International is a beneficiary of the Government of India’s production-linked incentive (PLI) scheme for domestic smartphone manufacturing.

ED has also said that Chinese smartphone maker Vivo officials breached rules of their business visas by visiting the "sensitive" Jammu and Kashmir. A court filing by the government probing agency stated that at least 30 Chinese individuals entered India on business visas and worked as Vivo employees, but their application forms "never disclosed" that the firm was their employer.

"Various Chinese nationals have been traveling across India, including sensitive places of Jammu and Kashmir and Ladakh, in gross violation of Indian visa conditions," it added, shedding light for the first time on the alleged offences.

The probe agency further accused Vivo of violating FDI norms between 2014 and 2018. It said that since wholesale cash and carry businesses don’t require government approval under the 100 per cent automatic FDI route, Vivo masked its wholesale cash and carry business and concealed its ownership.

In July 2022, the ED had conducted raids at Vivo offices in relation to money laundering offences. Following that, the ED had alleged that Rs 62,476 crore was “illegally” transferred by Vivo to China in order to avoid payment of taxes in India. These transfers, according to the ED, were made to show losses and to avoid paying taxes in India.

(With agency inputs)

Also read: ED says Vivo officials committed visa violations, visited 'sensitive' J&K

Also read: Who is Lava International MD Hari Om Rai and why did ED arrest him in Vivo money laundering case