Vivo Tried To Challenge India’s integrity and Sovereignty: ED

The Enforcement Directorate (ED) said to Delhi High Court that the Chinese smartphone manufacturer Vivo Mobile India has indulged in the “heinous economic offence” of money laundering to destabilise the financial system and challenge the integrity and sovereignty of the country while stating that due process of law has been followed while investigating the case and freezing of its 10 bank accounts.

The probe agency, in its reply to Vivo’s petition, said that the commercial engagements of Vivo and its reputation and goodwill are not a relevant consideration during an investigation into the offence of such a “heinous economic offence”. It cited the Orissa High Court’s judgement in Mohd Arif versus ED where it was held that the offence of money laundering as an act of financial terrorism not only poses a serious threat to the financial system of the country but also to the integrity.

The reply has come in response to Vivo Mobile’s petition seeking permission to operate its frozen bank accounts by the ED in a money-laundering probe. The HC had on July 13 allowed the company to operate its ten bank accounts, which were frozen, but asked the company to operate its bank accounts to the extent that a balance of Rs 251 crore — the amount which was lying when the bank accounts were frozen, is maintained at all times and also to furnish a bank guarantee of Rs 950 crore with the ED in seven working days. The directorate has, as of now, quantified the proceeds of crime at Rs 1,200 crore.

The ED in its response submitted that Vivo cannot claim any violations of fundamental rights as Article 19(1)(g) is a freedom granted in respect of lawful trade, occupation and business and not in respect of a business conducted based on “fraud and misrepresentation of identity.” The law does not require an investigating agency to give prior intimation to the entity being searched, it said, adding that “in fact doing so will be a dereliction of duty on the part of the investigation agency.”

During the search operation on July 5 at the head office of Vivo Mobile India, various incriminating documents, invoices and details of huge transactions between Grand Prospect International Communications and Vivo Mobile India were recovered. “The employees of Vivo India, including some Chinese nationals, did not cooperate with the search proceedings and had tried to abscond, remove and hide digital devices which were retrieved by the search teams,” the ED alleged.

Denying any violation of the principles of natural justice, the affidavit said that before any confirmation of freezing order Vivo would be heard by the adjudicating authority. As of now, “the freezing order issued by the respondent (ED) is merely provisional as it is only for a fixed period not exceeding 180 days as provided in Section 20 of PMLA, the affidavit stated.

According to the agency, the Indian arm of Vivo “remitted” almost 50 per cent of its turnover, which is Rs 62,476 crore, mainly to China to avoid paying taxes in India. It had also seized Rs 73 lakh cash and 2 kg gold bars after its pan-India raids that were conducted on July 5 across the country, including Delhi, Uttar Pradesh, Meghalaya and Maharashtra, under PMLA against Vivo and 23 related firms.