New Delhi: The Enforcement Directorate (ED) said on Friday that the adjudicating authority has issued show cause notices to Xiaomi Technology India Pvt Ltd, its officials and three banks under the relevant provision of the Foreign Exchange Management Act (FEMA). A complaint was registered by the probe agency regarding illegal remittance of Rs 5,551.27 crore by the company.
“Show cause notices have been issued to the company along with Manu Kumar Jain, former Managing Director of the company and Sameer B. Rao, the present director and chief financial officer of the company. The Adjudicating Authority has also issued show cause notices to three banks. , Citi Bank, HSBC Bank, and Deutsche Bank AG for violation of section 10(4) and 10(5) of FEMA and for violation of directions issued by RBI by allowing foreign outward remittance in the name of royalty through banks without due diligence and without obtaining any underlying technical collaboration agreement from the company,” the ED said.
The ED had earlier frozen Rs 5,551.27 crore of Xiaomi Technology India Pvt Ltd lying in its bank accounts under provisions of the Foreign Exchange Management Act for unauthorized remittance of this amount abroad in the guise of royalty by the company.
“The competent authority has also observed that the payment of royalty is nothing but a means of transferring foreign exchange out of India and is in gross violation of the provisions of FEMA,” the official said.
The ED launched a PMLA probe last year in connection with illegal money laundering by the company.
During the investigation, it was found by the ED that the company remitted foreign exchange to the tune of Rs 5,551.27 crore to three foreign-based entities, including a Xiaomi group entity, in the guise of royalty, in violation of Section 4 of FEMA.