The Adjudicating Authority of Enforcement Directorate has issued show-cause notices to Xiaomi Technology India Private Limited, its officials and three banks on the basis of a complaint filed by the investigating agency which unearthed illegal remittances made by the Chinese telecom company to the tune of ₹5,551.27 crore.
The SCN were also issued under Section 16 of the Foreign Exchange Management Act, to Xiaomi’s former Managing Director Manu Kumar Jain, and its Director and Chief Financial Officer Sameer B Rao. Besides them, CITI bank, HSBC Bank, and Deutsche bank AG have been asked to appear before the Adjudicating Authority for contravention of Section 10(4) and 10(5) of FEMA, said the ED in an official statement.
ED had earlier seized ₹5,551.27 crore of Xiaomi Technology India Pvt Ltd lying in its bank accounts under the provisions of FEMA for unauthorised remittance of this amount in guise of royalty abroad by the company.
The competent authority also observed that payment of royalty is nothing but a tool to transferring the foreign exchange and the same is in blatant violation of provisions of FEMA, the ED observed.
The agency had initiated investigation into the illegal remittances last year and found out that Xiaomi wired foreign currency equivalent to ₹5,551.27 crore to three foreign based entities which include one Xiaomi group entity in the guise of royalty. The Chinese company had created documentary façade amongst the group entities, alleged the agency.