Crackdown on Chinese companies linked to arrest of ‘spy’ Charlie Peng: sources

The recent crackdown on Chinese companies by the Income Tax Department and law enforcement agencies is linked to the arrest of Chinese national Luo Sang alias Charlie Peng, who ran the Hawala network, sources said. governmental. However, the companies have denied the allegations.

The Income Tax Department caught Charlie Peng in raids linked to a Hawala network of Rs 1,000 crore in August 2020.

After the search, while reviewing the Hawala transaction and evidence collected from Peng’s premises, a government source said ANI that the department learned that he ran the hawala network for major Chinese mobile phone and fintech companies.

As the investigation progressed, IT officials learned from evidence that Charlie Peng was conducting hawala transactions for Chinese mobile phone companies and some fintech companies.

Senior officials of the Central Board of Direct Taxation (CBDT), the parent body of the Income Tax Department, have been briefed on the Charlie Peng hawala network.

Peng was carrying out the hawala transaction through his network of shell companies and laundering funds to and from China.

After reviewing the evidence, the department gave officials the go-ahead and the Delhi investigative wing of the income tax department was tasked with curbing Charlie Peng’s hawala link.

Another source said that after the tax search at Charlie Peng in August 2020, searches at ZTE Corp were conducted at five premises in August 2021.

Later, the Ministry of Finance issued a statement without naming ZTE, stating, “Examination of import invoices against sales invoices shows that there was approximately 30% gross profit on trading equipment, although the company has been incurring huge losses over the years”.

The statement further read: “It is therefore evident that losses are accrued by the company through false expenditures in relation to the services it provides. Few such recipients have been identified in which substantial expenditure were accounted for over the years. These entities were found non-existent at their addresses.”

“Furthermore, the said entities are also not filing their income tax returns (ITRs). Other such dubious entities are under investigation. over the years,” the finance ministry said.

After ZTE Corp, the income tax department conducted searches in more than twenty premises of Xiaomi, OPPO, Oneplus and some fintech companies in December 2021.

CBDT’s statement says that the two major companies have made remittances in the form of royalties, to and on behalf of its group companies located overseas, which total more than Rs 5,500 crore.

“The claim for these expenses does not appear appropriate in light of the facts and evidence gathered during the search action, he said. Such failures expose them to criminal prosecution under the law of the 1961 income tax, the amount of which could be in the range of over Rs 1000 crore,” the CBDT statement added.

A search of Huawei Technologies at its premises in New Delhi, Gurugram and Bengaluru in February 2023 was the latest in this regard.

In a statement without naming the company, CBDT said a major telecommunications group failed to account for revenue of Rs 4 billion in its book and showed expenses of Rs 4.8 billion that the company did not. has not justified.

Sources said ANI that the search at Charlie Peng’s house led to more than a dozen raids by central investigative agencies like the Income Tax Department and the Law Enforcement Branch into China’s mobile phone companies and financial technology.

Peng is currently out on bail after being arrested by the Law Enforcement Branch under the Prevention of Money Laundering Act (PMLA) last year.

Peng faces cases from ED, Delhi Police Special Cell. He is also accused of spying for China. Peng was previously arrested by Delhi police in 2018 and later released on bail for allegedly living in India under a false identity.

A Huawei spokesperson said the company categorically denies any connection to Charlie Peng.

According to the statement, “The company categorically denies such baseless and false rumors and reserves its legal rights to protect its reputation against such misleading information. We again emphasize that Huawei in India has conducted its operations in a manner consistent with all applicable laws of the land.”

Xiaomi’s spokesperson said, “We completely disclaim any knowledge or connection to the person you noted in your email. We do not know this person and have not conducted any transactions with said person. We do not commit to our political group of ethical best practices and refuse any dealings or transactions contrary to Indian laws and regulations. In short, we categorically refuse any association with the person mentioned in your e-mail.

“We reserve our rights in all respects and will take such actions as may be advised to protect our reputation,” the Xiaomi spokesperson said. Mobile phone company OPPO declined to comment on the story while OnePlus did not come back with its version until this story was filed.

(To receive our daily E-paper on WhatsApp, please Click here. We allow the PDF of the document to be shared on WhatsApp and other social media platforms.)

Posted: Wednesday May 4th 2023, 8:38 PM IST