Indian authorities said today that an investigation found that Chinese smartphone maker Xiaomi Group illegally sent money to foreign entities in the form of fake royalties, and authorities have seized $725 million from Xiaomi’s local bank accounts in India. Reuters reported that the Enforcement Directorate, India’s financial crime agency, has been investigating Xiaomi’s alleged business practices in violation of India’s foreign exchange laws.
The Bureau of Enforcement pointed out that Xiaomi Technology India Private Limited (Xiaomi Technology India Private Limited) has now remitted foreign currency equivalent to 55.5 billion rupees to three overseas entities, including Xiaomi Group, in the name of paying royalties. Seize the company’s bank account assets.
“Such large sums of money in the name of royalties were remitted in accordance with the physical instructions of their Chinese parent group,” the enforcement agency said in a statement today.
Xiaomi Group did not immediately respond to Reuters’ inquiries, but had previously said it was “cooperating with the authorities’ ongoing investigations to ensure that the authorities have all necessary information”.
The Indian law enforcement agency’s action represents an expansion of scrutiny of Xiaomi, whose Indian offices were raided in December last year for alleged tax evasion in a separate investigation by the authorities.
In addition, the Bureau of Enforcement asked the company to provide information on foreign funds, shareholding and financing models, financial statements, and key executives running the business.