Vivo, ZTE under govt scanner for financial irregularities: Report
Prior to Vivo and ZTE, Xiaomi India has also been under scrutiny by the enforcement directorate (ED) for irregularities.
Updated:Tue, May 31, 2022 10:49am
By Danny Dcruze
A new report suggests that Chinese smartphone companies Vivo and ZTE are under scrutiny in India. The local units of ZTE Corp and the Vivo Mobile Communication Co. are being investigated for financial improprieties. Xiaomi India is another major Chinese smartphone maker that is currently under investigation by the ED.
A report by Bloomberg has suggested that the Ministry of Corporate Affairs received information from unknown sourced about the potential violation including fraud. The ministry will be undertaking the investigation of auditor reports of the company.
The ministry received an inquiry to check "significant irregularities in ownership and financial reporting", according to the documents spotted by Bloomberg. Additionally, concerned authorities have also been asked to inquire about the accounts of ZTE on an urgent basis.
Xiaomi India has also been under scrutiny by the enforcement directorate (ED) for irregularities. The Chinese company's accounts with over Rs 5,500 crore were frozen by ED in an attempt to stop the company from using these funds.
The Karnataka High Court gave Xiaomi some relief by allowing the company to use these funds for day-to-day operations. Earlier this month, ED asked the court to reinstate the freeze on the company's accounts.
Xiaomi came under ED's scanner earlier this year, in the month of February. The Indian agency claimed that the company made illegal remittances. The company has been accused of making these remittances from the year 2015, just one year after it entered the Indian market.
Xiaomi India has categorically denied any wrongdoing on its part. The company claims its royalty payments and statements to the bank are legitimate. The brand claims that these royalty payments were for licensed technologies and IPs. They stated that these IPs have been used for Xiaomi products sold in India.
The new investigation on Vivo and ZTE following the Xiaomi India is expected to alert other major smartphone manufacturers in India. Xiaomi is still the best-selling smartphone brand in the country for its various budget and mid-range offering. The company's Redmi line-up is also wildly popular due to its value for money proposition. It is to be seen if the ongoing investigations will dent the company's image in India.