According to a court filing seen by Reuters, Chinese smartphone maker Xiaomi Corp has alleged that during questioning by Indiaโs financial crime fighting agency, its top executives faced threats of โphysical violenceโ and coercion.
Xiaomiโs filing dated May 4 stated that the Enforcement Directorateโs (ED) officers warned the companyโs former India managing director, Manu Kumar Jain, current Chief Financial Officer Sameer B.S. Rao, and their families of โdire consequencesโ if they did not submit statements as desired by the central agency.
According to Reuters, the Enforcement Directorate did not immediately respond to a request for comment.
Since February, the Chinese company has been under investigation in India. Last week, accusing it of making illegal remittances abroad โin the guise of royaltyโ payments, the ED seized $725 million lying in the companyโs India bank accounts.
Stressing that its royalty payments were legitimate, Xiaomi has denied any wrongdoing. A judge heard Xiaomi lawyers on Thursday and put on hold the Indian agencyโs decision to freeze bank assets. The next hearing is set for May 12.
Xiaomi has alleged intimidation and threats by Indiaโs premier enforcement agency when the companyโs executives appeared for questioning several times in April.
According to the filing in the High Court Karnataka, Mr Jain and Mr Rao were on certain occasions โthreatened โฆ with dire consequences including arrest, damage to the career prospects, criminal liability and physical violence if they did not give statements as per the dictates ofโ the agency.
It further added that the executives โwere able to resist the pressure for some time, (but) they ultimately relented under such extreme and hostile abuse and pressure and involuntarily made some statementsโ.
Citing pending legal proceedings, Xiaomi declined to comment on the matter, whereas Jain and Rao did not respond to Reuters queries.
During the investigation, according to Xiaomiโs court filings, Indian agency officials โdictated and forcedโ Xiaomi India CFO Rao to include a sentence as part of his statement โunder extreme duressโ on April 26.
The line read: โI admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group.โ
However, the next day on April 27, Rao withdrew the statement saying it was โnot voluntary and made under coercionโ.
Two days later, the directorate issued an order to freeze assets in Xiaomiโs bank accounts.
In a previous media statement, Xiaomi said it believes its royalty payments โare all legit and truthfulโ and the payments were made for โin-licensed technologies and IPs used in our Indian version products.โ
Xiaomiโs court filing stated that it is โaggrieved for being targeted since some of its affiliate entities are based out of Chinaโ.
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