Chinese smartphone maker Xiaomi says its top executives have faced threats of “physical violence” and coercion during an interrogation by the Indian Financial Crimes Agency, according to a lawsuit seen by Reuters.

Enforcement officials have warned former India’s managing director Manu Kumar Jain, current CFO Sameer BS Rao and their families of the “severe consequences” if they do not make statements at the agency’s request, Xiaomi said in a statement on May 4. .

The Enforcement Directorate did not immediately respond to a request for comment.

Xiaomi has been under investigation since February, and last week the Indian agency confiscated $ 725 million (approximately Rs 5,570) in the company’s bank accounts in India, claiming it had made illegal remittances abroad “under the guise of royalty payments”.

Xiaomi has denied any wrongdoing, saying its copyright payments are legal. On Thursday, a judge heard Xiaomi’s lawyers and postponed the Indian agency’s decision to freeze bank assets. The next meeting is scheduled for May 12.

The company alleges intimidation by India’s leading law enforcement agency when executives were questioned several times in April.

Jain and Rao have in some cases been “threatened … with serious consequences, including arrest, damaging career prospects, criminal liability and physical violence if they do not make statements under the agency’s dictates,” according to documents from the South Supreme Court. Karnataka.

The leaders “managed to withstand the pressure for a while, (but) eventually gave in to such extreme and hostile abuse and pressure and inadvertently made some statements,” it added.

Xiaomi declined to comment, citing pending lawsuits. Jain and Rao did not respond to Reuters inquiries.

Jain is now Xiaomi’s global vice president based in Dubai and is credited with Xiaomi’s rise in India, where his smartphones are extremely popular.

Xiaomi was the leading smartphone retailer in 2021 with 24 percent market share in India, according to Counterpoint Research. It also deals with other technology gadgets, including smart watches and TVs, and has 1,500 employees in the country.


Many Chinese companies are struggling to do business in India due to political tensions following a border clash in 2020. India cites security concerns over the banning of more than 300 Chinese applications since then and has also tightened standards for Chinese companies investing in India.

Tax inspectors raided Xiaomi’s offices in India in December. After receiving information from the tax authorities, the Enforcement Directorate, which is investigating issues such as violations of foreign exchange laws, began reviewing Xiaomi’s copyright payments, court documents show.

The agency said last week that Xiaomi Technology India Private Limited (XTIPL) had sent a foreign currency equivalent of $ 725 million (approximately Rs 5,570 crore) to legal entities overseas, although Xiaomi had “not benefited from any service” from them.

“Such huge sums in the name of remuneration were transferred on the instructions of their Chinese subjects to the parent group,” the agency said.

Xiaomi’s court records allege that during the investigation, Indian agency officials “dictated and forced” Xiaomi India CFO Rao to include a sentence as part of his “under duress” statement on April 26.

The line read: “I acknowledge that copyright payments have been made by XTIPL as directed by certain individuals in the Xiaomi Group.”

A day later, on April 27, Rao withdrew the statement, saying it was “not voluntary and was made under duress”, documents show.

Two days later, the directorate issued an order to freeze assets in Xiaomi’s bank accounts.

Xiaomi said in a previous press release that it believes its copyright payments are “legal and correct” and the payments are made for “licensed technologies and IP addresses used in our Indian version products.”

His court documents state that Xiaomi is “sorry that it was targeted, as some of its subsidiaries are based outside China.”

A Xiaomi spokesman made the following statement to Gadgets 360 about the allegation.

“The content of the written petition is confidential as public domain. There seems to be a desire to create some kind of sensation, without taking into account the impact it will have on ED, the Government of India and the company. This issue is also pending before the court. We refuse to comment on this. We reserve our rights in all respects and will take steps if we can be advised to protect our reputation. “

© Thomson Reuters 2022


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