After a review determined the smartphone maker had made unlawful remittances to overseas organisations by passing them off as royalty payments, India announced on Saturday that it had seized $725 million from Xiaomi Corp’s local bank accounts.
The Enforcement Directorate had been looking into the Chinese firm’s operations for possible violations of Indian foreign exchange laws.
Xiaomi Technology India Private Limited’s bank account assets were seized by the financial crime fighting agency on Saturday after it was discovered that the company had remitted the foreign currency equivalent of 55.5 billion rupees to three foreign-based entities, including one Xiaomi group entity, ‘in the guise of royalty’ payments.
The money was sent to two other unidentified and unconnected U.S. businesses for “the ultimate advantage of the Xiaomi group entities,” according to the government.
The directorate stated that ‘such massive amounts in the name of royalties were remitted on the directions of their Chinese parent group organisations.’
Xiaomi said it conforms with Indian regulations and believes its ‘royalty payments and bank statements are all valid and truthful,’ according to a statement released later on Saturday.
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