HomeNewsLava Cofounder Arrested for Helping Vivo in Money Laundering

Lava Cofounder Arrested for Helping Vivo in Money Laundering

Hari Om Rai, along with Rajan Malik, allegedly played a role in assisting Chinese nationals associated with Vivo in expanding their presence in India

In a significant development, the Enforcement Directorate (ED) has disclosed that since its inception in 2014, Chinese phone manufacturer Vivo has remitted over ₹1 lakh crore out of India. This revelation has to a series of arrests, including the chairman and managing director of Lava International, a Chinese national, and a chartered accountant. The move comes as part of an ongoing money laundering investigation against Vivo under the Prevention of Money Laundering Act (PMLA), initiated by the federal agency in 2022.

Arrests and Accusations:

The individuals arrested in connection with the Vivo case are:

  1. Hari Om Rai: The founder and managing director of Lava International, who is accused of aiding Vivo in its alleged money laundering activities.
  2. Guangwen Kyang (Andrew Kuang): A Chinese national who played a key role in Vivo’s alleged money laundering operations.
  3. Nitin Garg: A chartered accountant who worked for Vivo.
  4. Rajan Malik: The statutory auditor of Lava International.

Key Findings of the Probe:

The ED’s probe, initiated in 2022, has unveiled several key findings. It has been claimed that Vivo, after entering the Indian market in 2014, incorporated 19 additional companies in various cities. These companies had Chinese nationals as directors and shareholders, effectively controlling the entire supply chain of Vivo mobile phones in India.

The investigation further suggests that Vivo entered India under the guise of a wholesale cash and carry business to evade government approval. The foreign direct investment policy of 2014-15 permitted 100% overseas investment in single-brand retail under the government route. Still, for wholesale businesses, 100% foreign direct investment (FDI) was allowed under the automatic route, eliminating the need for government approval.

Allegations and Response:

The ED alleges that Vivo concealed its true ownership, control, and the nature of its activities from Indian government authorities. Last year, the agency had conducted raids on Vivo’s offices and associated companies, alleging that Vivo had illicitly transferred ₹62,476 crore to China to avoid Indian taxes.

Vivo has maintained its ethical principles and dedication to legal compliance, expressing deep concern over the recent arrests and asserting that it will explore all available legal options.

According to the ED’s court documents, as per the media reports, the network of Vivo companies communicated through various Chinese applications, with data stored on servers in China. The agency has argued that these findings reflect a well-planned, multi-layered criminal conspiracy involving concealed Chinese control over Indian entities.

Key figures, such as Bin Luo, a Chinese national, were pivotal in establishing Chinese-controlled networks across India. Hari Om Rai, along with Rajan Malik, allegedly played a role in assisting Chinese nationals associated with Vivo in expanding their presence in India.

As per reports, ED also noted that various Chinese nationals had been found travelling across India, including sensitive regions like Jammu and Kashmir and Ladakh, in violation of Indian visa conditions. The investigation continues as more details emerge in this high-profile case.

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