© Reuters. FILE PHOTO: The Xiaomi logo is seen inside the company’s offices in Bangalore, India, January 18, 2018. REUTERS/Abhishek N. Chinnappa
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by Aditya Kalra and Abhirup Roy
NEW DELHI (Reuters) – Chinese smartphone maker Xiaomi (OTC: ) claims its executives were subjected to “physical violence” and coercion when questioned by India’s financial crime agency, according to a court filing seen by Reuters. threat.
In documents filed by Xiaomi in May, law enforcement officials have warned the company’s former India CEO Manu Kumar Jain, current CFO Sameer BS Rao and their families that they will be charged if they fail to submit statements that do not meet the agency’s requirements. Will have “catastrophic consequences” 4. Announce.
After the Reuters article was published, law enforcement issued a statement saying Xiaomi’s claims were “false and baseless” and that company executives “voluntarily filed suit under the ‘most favorable circumstances’.
Xiaomi has been under investigation since February, and last week Indian agencies seized $725 million from the company’s Indian bank accounts, claiming it was sending illegal money transfers overseas under the guise of royalties.
Xiaomi denies any wrongdoing, saying its royalties are legal.
On Thursday, a judge heard from Xiaomi’s lawyers and suspended the Indian agency’s decision to freeze the bank’s assets. The next hearing is scheduled for May 12.
The company claims law enforcement intimidated executives when they appeared in court multiple times for questioning in April.
According to South Karnataka, Jain and Rao are under certain circumstances “threatened (…) of dire consequences, including arrest, impaired career prospects, criminal liability and physical violence, if they fail to comply with the agency’s Statement of Instructions” State Superior Court filing.
He added that leaders “can withstand the pressure for a while,[but]they finally succumbed to such extreme and hostile abuse and pressure and unknowingly made a statement”.
In a statement to the media, law enforcement said it was “a professional organization with a strong work ethic and there was no coercion or harassment at any time.” Threats to company executives.
Xiaomi declined to comment, citing ongoing legal proceedings. Jain and Rao did not respond to questions from Reuters.
Jain, now Xiaomi’s global vice president in Dubai, is credited with making Xiaomi’s smartphones popular in India.
Xiaomi is the largest smartphone seller in 2021, with a 24% market share in India, according to Counterpoint Research. It also sells other tech products, including smartwatches and TVs, and employs 1,500 people in the country.
remittance struggle
Many Chinese companies have been struggling to do business in India due to political tensions following the 2020 border conflict. Since then, India has banned more than 300 Chinese apps, citing security concerns, and tightened standards for Chinese companies to invest in India.
In December, tax inspectors raided Xiaomi’s India offices. After receiving information from tax authorities, the law enforcement agency, which investigates issues such as foreign exchange violations, began reviewing Xiaomi’s royalties, court documents show.
The agency said last week that Xiaomi Technology India Private Limited (XTIPL) had handed over 55.5 billion rupees ($725 million) worth of foreign currency to overseas entities, even though Xiaomi did not “use any services” from them.
“The huge sums in the name of royalties were paid at the direction of its Chinese parent group entity,” the agency said.
During the investigation, Indian agency officials “ordered and compelled” Rao, Xiaomi India’s chief financial officer, to add a sentence “under extreme duress” to his statement, Xiaomi’s court documents said. April 26.
The line reads: “I accept the payment of royalties by XTIPL at the direction of certain persons in the Xiaomi Group.»
A day later, on April 27, Rao withdrew his statement, saying he was “unwilling and coerced,” according to the documents.
Two days later, management issued an asset freezing order on Xiaomi’s bank accounts.
Xiaomi said in a previous media statement that it believed its royalty payments were “all legal and genuine” and that the payments were made for “licensed technology and IP addresses used in our Indian version of the product.”
Its court filing said Xiaomi was “indignant that some of its affiliated entities were targeted outside of China”.