Xiaomi claimed its top executives were threatened with “physical violence” when they were questioned by India’s financial crimes investigation agency, according to a court filing.
The Chinese telecommunications company has been accused by the Enforcement Directorate of making illicit remittances and has been under investigation since February.
Last week the Indian agency seized $725 million from the company’s India bank accounts.
The directorate wrote on Twitter that Xiaomi was suspected of violating the Foreign Exchange Management Act (FEMA) “in connection with the illegal outward remittances made by the company”.
Xiaomi has denied any wrongdoing, saying it made legitimate royalty payments. 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.
A court filing seen by Reuters claims Enforcement Directorate officers 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 the agency required.
The Enforcement Directorate described the allegations of coercion as “untrue and baseless” in a statement issued on Saturday.
“The officials of the Xiaomi India deposed their statements before ED under FEMA voluntarily in the most conducive environment on various occasions,” the agency said.
Executives Intimidated, Says Xiaomi
The company alleges India’s financial crime agency intimidated its executives appeared for questioning multiple times in April.
Jain and 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”, 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.
Xiaomi declined to comment citing pending legal proceedings. Jain and Rao did not respond to Reuters queries.
Jain is now Xiaomi’s global vice president based out of Dubai and is credited for Xiaomi’s rise in India, where its smartphones are hugely popular.
Xiaomi was the leading smartphone seller in 2021 with a 24% market share in India, according to Counterpoint Research.
- Reuters, with additional editing by George Russell
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