The allegations leveled by Xiaomi against the country’s Enforcement Directorate (ED) were first reported by Reuters. According to media reports, in court documents, it has been said on behalf of Xiaomi that both its former Managing Director in India and the current Chief Financial Officer were warned of dire consequences during the interrogation. It is alleged that the ED was forcing both of them to submit some documents. However, the ED has called these claims false. It has said that Xiaomi’s claims are false and baseless. It has said that the company’s executives had testified voluntarily in a very conducive environment.
This court filing of May 4 has brought a new twist in the matter. The company is alleged to have remitted approximately $725 million overseas for dubious royalty payments. At the same time, Xiaomi has denied any wrongdoing. Claimed that his royalty payments were valid and correct. Under this whole matter, in December last year, the Income Tax Department searched Chinese mobile companies Xiaomi, Oppo, OnePlus and some other Chinese fintech firms. Searches were conducted at the premises of the companies in different parts of the country including Karnataka, Tamil Nadu, Assam, West Bengal, Andhra Pradesh, Madhya Pradesh, Gujarat, Maharashtra, Bihar, Rajasthan and Delhi-NCR.
The ED, in its investigation, has found that Xiaomi did not comply with regulatory orders for disclosure of transactions with related enterprises. Foreign funds have been included in Xiaomi’s books, but it has been found that the source from which such money was received is doubtful. The lender reportedly has no credit. This amount is in crores of rupees, on which interest expense has also been claimed.