SFIO Likely to Charge Vivo This Month in Ongoing Fund Diversion Probe

SFIO Set to Charge Vivo This Month as Fund Diversion Probe Enters Final Stage

The Serious Fraud Investigation Office (SFIO) is preparing to file its chargesheet against Vivo, one of India’s top-selling smartphone brands, in an alleged ₹2,000 crore fund diversion case. According to senior officials, the chargesheet will be filed in December, marking a crucial step in a large-scale investigation that has already revealed significant compliance lapses among leading Chinese smartphone companies.

Wider Investigation Uncovers Suspected Fraud of Over ₹6,000 Crore

The SFIO’s investigation extends beyond Vivo and includes Oppo and Xiaomi, two other major players in India’s smartphone market. Officials revealed that the wider probe has uncovered suspected fraud exceeding ₹6,000 crore, signalling deep-rooted governance and compliance issues among the three Chinese brands.

The findings point to a pattern of financial misrepresentation, fund diversion, and questionable related-party arrangements within these companies. As of now, only the chargesheet against Vivo is ready, while the investigations into Oppo and Xiaomi continue.

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Charges Under Section 447 Point to Serious Corporate Fraud

In Vivo’s case, the alleged fraud has been quantified at more than ₹2,000 crore. The company faces charges under Section 447 of the Companies Act, 2013, a stringent provision that deals with corporate fraud and carries both civil and criminal penalties.

The final penalty will be determined by the Registrar of Companies (RoC) once the chargesheet is adjudicated. Officials stated that both the minimum and maximum penalty limits prescribed under the Act have been clearly outlined in the chargesheet.

MCA-Directed Probe Triggered by Registrar of Companies Findings

The investigation began earlier this year after the Ministry of Corporate Affairs (MCA) directed the SFIO to look into Chinese smartphone makers. This directive followed a detailed RoC report, which highlighted a potential fund diversion of nearly ₹6,000 crore across multiple entities linked to the smartphone companies.

The SFIO, a specialised agency under the MCA, launched the probe in March, using its mandate to examine cases involving complex financial irregularities and layered corporate structures.

Clear Money Trail Strengthens SFIO’s Case Against Vivo

According to officials, the investigation into Vivo uncovered a clear money trail, supported by documentary evidence of diversion of funds and diversion of profits.
The SFIO scrutinised company records, bank transactions, financial statements, auditor reports, and related-party dealings. The agency also summoned senior executives and directors for questioning to trace the movement of funds and the purpose behind the financial structuring used by the company.

Once the investigation was complete, the SFIO prepared a detailed report for the government, paving the way for the upcoming chargesheet.

Vivo Expected to Challenge Government’s Findings

Despite the mounting regulatory pressure, Vivo — India’s top smartphone brand by volume and the third largest by value after Apple and Samsung — is expected to challenge the government’s findings.
Executives within the company are preparing to contest the charges, arguing that the alleged fund flows were part of legitimate business practices. All queries sent to Vivo, Oppo and Xiaomi by reporters went unanswered.

ED’s ₹20,241 Crore Money Laundering Case Adds to Vivo’s Troubles

The SFIO investigation is not the only legal challenge Vivo faces. The company is already embroiled in a major money laundering case filed by the Enforcement Directorate (ED) in 2022, involving ₹20,241 crore.

According to the ED chargesheet, Vivo allegedly created a complex network of multiple business entities controlled directly or indirectly by Vivo China. These entities reportedly generated large revenues in India, which were then remitted overseas under the guise of import payments.

A Delhi court earlier this year summoned top Vivo executives — including the CEO, CFO, and senior leaders of Vivo Mobile India — for their alleged involvement in siphoning funds out of the country.

Vivo–Dixon JV Waiting for PN3 Approval Amid Heightened Scrutiny

The regulatory environment has also slowed down Vivo’s expansion plans. Its proposed manufacturing joint venture with Dixon Technologies, under which Dixon will acquire a 51% stake in Vivo’s India manufacturing unit, is still awaiting approval under Press Note 3 (PN3).

Because Vivo is a Chinese-owned entity from a country that shares a land border with India, PN3 clearance is mandatory. Officials indicate that the ongoing investigations could impact the approval timeline.

Vivo’s Manufacturing Restructuring Continues Despite Investigations

As part of its operational restructuring, Vivo earlier sold its older leased unit in Greater Noida to Bhagwati Enterprises, the manufacturing arm of Micromax Informatics. The company has since shifted to a larger, company-owned factory in the same area.
Interestingly, production continues at the older unit as well, with Bhagwati manufacturing select Vivo smartphone models.

Industry Watches Closely as SFIO Moves Toward Chargesheet

With the SFIO now ready to file its chargesheet, all eyes are on the potential implications for India’s smartphone market. The outcome could set a precedent for regulatory compliance expectations from multinational companies, especially those operating in sectors involving mass-market consumer electronics.

The coming weeks will be crucial as the chargesheet formally brings the long-running investigation into its next phase, placing Vivo and other Chinese smartphone makers under unprecedented regulatory scrutiny in India.

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