ED reportedly asks court to reinstate freeze on Xiaomi’s bank accounts
India’s financial crimes agency on Thursday asked a court to reaffirm the freezing of $725 million (approximately Rs 5,624 crore) in Xiaomi’s Indian bank accounts as the company probes money transfers by the Chinese smartphone giant.
The enforcement directorate had seized the money, saying Xiaomi had illegally transferred money abroad to three entities, including one within the Xiaomi group. The entities described the payments as payments “under the guise of royalties”.
But the high court in the southern state of Karnataka suspended that decision after Xiaomi challenged it, saying all the royalty payments were legitimate.
The decision to freeze operations will remain in place for now, a judge at the same court said Thursday, adding that the agency will file a formal request to reinstate the freeze later in the day.
“The matter is yet to be heard,” added Justice Siddappa Sunil Dutt Yadav, fixing the next hearing for May 23.
A Xiaomi spokesperson did not immediately respond to a request for comment.
Xiaomi’s lawyers told the court that the banks did not allow the company to make the necessary payments, even though the court had allowed the company to use the funds for purposes other than royalty payments.
On Thursday, the judge allowed Xiaomi to use a bank credit facility for such payments.
The agency’s action comes after Xiaomi said in a court document that its top executives faced threats of “physical violence” and coercion during interrogations by law enforcement officials. The agency has rejected those claims as false.
© Thomson Reuters 2022
