By WU Yangyu
The Indian government has seized 55.5 billion rupees (US$670 million, 4.8 billion yuan) from Chinese smartphone maker Xiaomi. The funds have been frozen by India's financial crime agency since last year.
According to Reuters, show cause notices have been sent to Xiaomi and three banks: CitiBank, Deutsche Bank and HSBC. Show cause notices are typically issued to a company to ask it why the federal agency should not proceed against it for wrongdoing.
In April last year, the Enforcement Directorate (ED) of India subpoenaed then Xiaomi VP Manu Kumar Jain who quit the company in January this year, over alleged violations of Indian foreign exchange law. Days later, Xiaomi’s assets in India were frozen.
According to ED documents, Indian authorities believe that Xiaomi India was merely a trader and distributor of Indian-made phones and had not received substantial services from foreign entities.
The significant amounts transferred under the pretext of patent fees were instructed by Xiaomi's Chinese parent company and were ultimately for the benefit of the Xiaomi group, which according to the ED, was money laundering.
Xiaomi argued all the patent fee was used for phones sold in India, 84 percent of the funds frozen was payment to US tech company Qualcomm. Xiaomi’s appeal has been rejected several times over the past year.
Xiaomi came to India in 2014 and became the bestselling smartphone in 2017.