Reuters: Xiaomi accuses Indian agency of threats, physical violence
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Xiaomi says its top executive faced threats of violence and coercion during an investigation.
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Manu Kumar Jain, former managing director of Xiaomi India
Xiaomi Corp, the Chinese smartphone maker, said threats of "physical violence" were made against its top executives during questioning by India's financial crime-fighting agency.
A Xiaomi filing dated May 4 stated that officials from the Enforcement Directorate warned the company's former India managing director, Manu Kumar Jain, its current Chief Financial Officer Sameer B.S Rao and their families of "dire consequences" if they did not give their statements as dictated by the agency.
The Directorate issued a statement saying Xiaomi's allegations were "untrue and baseless".
The Indian agency seized $725 million in the company's India bank accounts last week, as Xiaomi has been under investigation since February, with the agency saying that the company made illegal remittances abroad "in the guise of royalty" payments.
The company says intimidation tactics were used by the agency when executives appeared for questioning on more than one occasion in April.
According to the filing, 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."
Jain is now Xiaomi's global vice president based in Dubai, and is credited with Xiaomi's rise in India, according to Reuters.
Chinese companies have struggled to conduct business in India due to political tensions following a border clash in 2020. Xiaomi's offices were raided by tax inspectors in December, and the Enforcement Directorate started reviewing the company's royalty payments shortly afterward.
The agency says that these payments were made for entities abroad even though Xiaomi had "not availed any service" from them, and that the payments were made on the instruction of the Chinese parent company. Meanwhile, Xiaomi noted that the payments were made for "in-licensed technologies and IPs used in our Indian version products".
Xiaomi says that Indian officials from the agency forced Xiaomi India's CFO to write "I admit the royalty payments have been made by XTIPL as per the directions from certain persons in the Xiaomi group." Rao withdrew the statement a day later saying it was made under coercion.
