The Enforcement Directorate (ED) has issued a show-cause notice to Xiaomi Technology India Private Limited, its Chief Financial Officer Sameer Rao, former Managing Director Manu Jain, as well as three banks on Friday, May 9. The notice comes in light of alleged violations of the Foreign Exchange Management Act (FEMA), with illegal remittances amounting to a staggering Rs 5,551.27 crore.
These funds were allegedly transferred overseas as unauthorised royalty payments, disguising the nature of the transactions.
The Adjudicating Authority has issued SCN to Xiaomi Technology India Private Limited, its officials and 3 banks under FEMA on the basis of complaint filed by the ED with respect to illegal remittances made by the company to the tune of Rs.5551.27 Crore.
— ED (@dir_ed) June 9, 2023
According to officials cited by news agency PTI, the ED initiated the action against Xiaomi India and its key executives based on their investigation into the company's financial activities.
The show-cause notice is a standard procedure following the probe, providing the company and individuals an opportunity to explain their actions and present their case before the adjudicating authority.
The adjudicating authority, operating under FEMA, has also issued show-cause notices to CITI Bank, HSBC Bank, and Deutsche Bank AG, in connection with their involvement in the alleged irregularities.
Upon the completion of the proceedings and after considering the responses from the concerned parties, penalties will be determined and imposed in accordance with the relevant rules and regulations.
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