The Ministry of Corporate Affairs (MCA) has tasked the Serious Fraud Investigation Office (SFIO) with investigating Chinese smartphone makers Vivo, Oppo, and Xiaomi after a Registrar of Companies (RoC) report alleged fund diversion to the tune of Rs 6,000 crore, two government sources have told Moneycontrol.
“SFIO is probing Vivo. Xiaomi and Oppo have also given to SFIO. Fund diversions have been alleged in the RoC report. Once the SFIO report is finalised, they will submit it to the MCA,” one of the sources cited above said.
The SFIO’s investigation, which began in March this year, is expected to take about a year. “The SFIO process will take about a year and began earlier this year in March,” the second government source told Moneycontrol.
Allegations
The RoC report stated that the three smartphone makers collectively diverted approximately Rs 6,000 crore, according to a second source.
The report formed the basis of the ministry’s decision asking the SFIO to conduct a detailed investigation.
Once finalised, the SFIO’s findings will be submitted to the ministry, which has the authority to initiate legal proceedings against the companies, their directors and related entities in a special court.
Xiaomi, Vivo and Oppo are yet to respond to Moneycontrol’s e-mails seeking their comments. The report will be updated when their responses come in.
The RoC finalised its report after months of scrutiny, the sources said. It recommended a more detailed investigation into alleged fund diversion, possible tax evasion and financial transactions with related entities.
It also shared its findings with the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC) on tax-related aspects, they said.
The RoC’s recommendations were sent to the MCA, which subsequently referred the matter to the SFIO, given the complexity and scale of the allegations, they said.
The probe comes amid heightened scrutiny of Chinese companies in India over alleged financial irregularities.
SFIO investigation
The Serious Fraud Investigation Office is a specialised agency under the ministry that investigates complex corporate fraud involving large-scale financial irregularities.
Cases are referred to it by the Centre, often based on findings of RoC or other regulators. Once the SFIO completes its investigation, it files a detailed report with the ministry, which can initiate legal proceedings in a special court.
SFIO investigations typically involve examining company records, financial transactions and related-party dealings and can also include summoning directors and executives for questioning.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
