Indian Agency Denies It Forced China's Xiaomi Officials To Give Statement

The Enforcement Directorate today denied reported allegations by Xiaomi India that the probe agency coerced its officials to give statements in an alleged illegal remittances case.

"The allegations that the statement of the officials of Xiaomi India was taken under coercion by ED (Enforcement Directorate) are untrue and baseless. The officials of Xiaomi India deposed their statements before ED under FEMA (Foreign Exchange Management Act) voluntarily in the most conducive environment on various occasions," the probe agency said in a statement today.

News agency Reuters reported the Chinese smartphone maker Xiaomi Corp has alleged its top executives faced threats of "physical violence" and coercion during questioning by the Enforcement Directorate.

Officials from the Enforcement Directorate warned the company's former India Managing Director Manu Kumar Jain, current Chief Financial Officer Sameer BS Rao, and their families of "dire consequences" if they did not submit statements as desired by the agency, Xiaomi's filing dated May 4 stated.

The Enforcement Directorate, however, today said the statements were "deposed by them on the basis of documents/information provided by the company during the course of investigation. Their statements corroborate with the written replies submitted to ED and the materials on record."

"It is reiterated that ED is a professional agency with strong work ethics and there was no coercion or threat to the officers of the company at any point of time," the probe agency said.

Xiaomi has been under investigation since February and last week the Indian agency seized $725 million lying in the company's India bank accounts, saying it made illegal remittances abroad "in the guise of royalty" payments.

Xiaomi has denied any wrongdoing, saying its royalty payments were legitimate. On Thursday, a judge heard Xiaomi lawyers and put on hold the Indian agency's decision to freeze bank assets. The next hearing is set for May 12.

The company alleges intimidation by India's premier enforcement agency when executives appeared for questioning multiple times in April.

Mr Jain and Mr Rao were on certain occasions "threatened ... with dire consequences including arrest, damage to the career prospects, criminal liability and physical violence if they did not give statements as per the dictates of" the agency, according to the filing in the High Court Karnataka, Reuters reported.

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," it added.