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Xiaomi accuses Indian agency of ‘physical violence’ threats during probe

Chinese smartphone maker Xiaomi Corp has alleged its prime executives confronted threats of “physical violence” and coercion throughout questioning by India’s monetary crime preventing company, in line with a court docket submitting seen by Reuters.

Officials from the Enforcement Directorate warned the corporate’s former India managing director, Manu Kumar Jain, present Chief Financial Officer Sameer B.S. Rao, and their households of “dire consequences” if they didn’t submit statements as desired by the company, Xiaomi’s submitting dated May 4 said.

The Enforcement Directorate didn’t instantly reply to a request for remark.

Xiaomi has been below investigation since February and final week the Indian company seized $725 million mendacity within the firm’s India financial institution accounts, saying it made unlawful remittances overseas “in the guise of royalty” funds.

Xiaomi has denied any wrongdoing, saying its royalty funds had been professional. On Thursday, a choose heard Xiaomi legal professionals and placed on maintain the Indian company’s resolution to freeze financial institution property. The subsequent listening to is about for May 12.

Jain and Rao had been on sure events “threatened … with dire consequences including arrest, damage to the career prospects, criminal liability and physical violence if they did not give statements as per the dictates of” the company, in line with the submitting within the High Court of southern Karnataka state.

The executives “were able to resist the pressure for some time, (but) they ultimately relented under such extreme and hostile abuse and pressure and involuntarily made some statements,” it added.

Xiaomi declined to remark citing pending authorized proceedings. Jain and Rao didn’t reply to Reuters queries.

Jain is now Xiaomi’s world vice chairman primarily based out of Dubai and is credited for Xiaomi’s rise in India, the place its smartphones are massively standard.

Xiaomi was the main smartphone vendor in 2021 with a 24% market share in India, in line with Counterpoint Research. It additionally offers in different tech devices together with good watches and televisions, and has 1,500 staff within the nation.

Many Chinese firms have struggled to do enterprise in India as a result of political tensions following a border conflict in 2020. India has cited safety considerations in banning greater than 300 Chinese apps since then and in addition tightened norms for Chinese firms investing in India.

Tax inspectors raided Xiaomi’s India places of work in December. On receiving data from tax authorities, the Enforcement Directorate – which probes points equivalent to overseas alternate regulation violations – began reviewing Xiaomi’s royalty funds, court docket paperwork present.

The company final week mentioned Xiaomi Technology India Private Limited (XTIPL) remitted overseas foreign money equal of 55.5 billion rupees ($725 million) to entities overseas regardless that Xiaomi had “not availed any service” from them.

“Such huge amounts in the name of royalties were remitted on the instructions of their Chinese parent group entities,” the company mentioned.

Xiaomi’s court docket submitting alleges that in the course of the investigation, Indian company officers “dictated and forced” Xiaomi India CFO Rao to incorporate a sentence as a part of his assertion “under extreme duress” on April 26.

The line learn: “I admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group.”

A day later, on April 27, Rao withdrew the assertion saying it was “not voluntary and made under coercion”, the submitting exhibits.

The directorate issued an order to freeze property in Xiaomi’s financial institution accounts two days later.

Xiaomi has mentioned in a earlier media assertion it believes its royalty funds “are all legit and truthful” and the funds had been made for “in-licensed technologies and IPs used in our Indian version products.”

Its court docket submitting said Xiaomi is “aggrieved for being targeted since some of its affiliate entities are based out of China”.

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