According to a court filing seen by Reuters, Chinese smartphone maker Xiaomi Corp has alleged that during questioning by India’s financial crime fighting agency, its top executives faced threats of “physical violence” and coercion.
Xiaomi’s filing dated May 4 stated that the Enforcement Directorate’s (ED) officers warned the company’s former India managing director, Manu Kumar Jain, current Chief Financial Officer Sameer B.S. Rao, and their families of “dire consequences” 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 “in the guise of royalty” payments, the ED seized $725 million lying in the company’s 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 agency’s decision to freeze bank assets. The next hearing is set for May 12.
Xiaomi has alleged intimidation and threats by India’s premier enforcement agency when the company’s 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 “threatened … 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 of” the agency.
It further added that the executives “were able to resist the pressure for some time, (but) they ultimately relented under such extreme and hostile abuse and pressure and involuntarily made some statements”.
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 Xiaomi’s court filings, Indian agency officials “dictated and forced” Xiaomi India CFO Rao to include a sentence as part of his statement “under extreme duress” on April 26.
The line read: “I admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group.”
However, the next day on April 27, Rao withdrew the statement saying it was “not voluntary and made under coercion”.
Two days later, the directorate issued an order to freeze assets in Xiaomi’s bank accounts.
In a previous media statement, Xiaomi said it believes its royalty payments “are all legit and truthful” and the payments were made for “in-licensed technologies and IPs used in our Indian version products.”
Xiaomi’s court filing stated that it is “aggrieved for being targeted since some of its affiliate entities are based out of China”.
As an independent media platform, we do not take advertisements from governments and corporate houses. It is you, our readers, who have supported us on our journey to do honest and unbiased journalism. Please contribute, so that we can continue to do the same in future.
