India accuses Xiaomi of illegally transferring money abroad

Reuters reported that the Indian Enforcement Directorate (ED) documented on June 9 that it had notified Xiaomi, Deutsche Bank, HSBC and Citibank, accusing Xiaomi of illegally sending money to foreign entities.

The Law Enforcement Agency of India pointed out that Xiaomi has transferred Rs 55.51 billion (~$237 billion) and these funds have been frozen since last year. Xiaomi and the three banks have not responded.

India has accused Xiaomi Technology India Private Company, Xiaomi India Branch and other local units of making illegal money transfers through royalty payments to foreign entities. Xiaomi has stressed that these payments are legal and that all means are being used to protect its reputation and interests.

The Indian government has also said that in addition to notifying Xiaomi and the CFO of Xiaomi's Indian branch, it has also notified the three banks for failing to comply with their investigation obligations and obtaining the necessary documentation to verify whether the royalties were in compliance.

Reuters reported last year that Indian investigators concluded that Xiaomi had misled Deutsche Bank by claiming that it had agreed to pay royalties when it had not.

Court documents show that Xiaomi's frozen funds are mainly distributed through several bank accounts, such as Deutsche Bank, the Citigroup and the HSBC. Last year, Xiaomi told the Indian court that the asset freeze was grossly disproportionate and that Xiaomi had ceased operations in India; however, in April this year, the Indian court still rejected Xiaomi's request to lift the freeze.