NEW DELHI (REUTERS) – Chinese smartphone maker Xiaomi has alleged its top executives faced threats of “physical violence” and coercion during questioning by India’s financial crime fighting agency, according to a court filing seen by Reuters.
Officials from the Enforcement Directorate warned the company’s former India managing director Manu Kumar Jain, current chief financial officer Sameer B.S. Rao, and their families of “dire consequences” if they did not submit statements as desired by the agency, Xiaomi’s filing dated on May 4 stated.
After the Reuters story was published, the Enforcement Directorate issued a statement saying Xiaomi’s allegations were “untrue and baseless” and company executives had deposed “voluntarily in the most conducive environment”.
Xiaomi has been under investigation since February and last week the Indian agency seized US$725 million (S$1 billion) 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 (May 5), 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 the 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 of southern Karnataka state.
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.
In its media statement, the Enforcement Directorate said it 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”.
Xiaomi declined to comment, citing pending legal proceedings.
Mr Jain and Mr Rao did not respond to Reuters queries.
Mr Jain is now Xiaomi’s global vice-president based in Dubai and is credited with Xiaomi’s rise in India, where its smartphones are hugely popular.
Xiaomi was the leading smartphone seller in 2021 with a 24 per cent market share in India, according to Counterpoint Research. It also sells other tech gadgets including smart watches and televisions, and has 1,500 employees in the country.