Huawei India chief’s conduct showed he was a leak risk: IT department

The Income Tax Department informed the Delhi High Court that a surveillance circular had been issued against the Managing Director of Huawei Telecommunications (India) “because his conduct during the search showed that he posed a flight risk.

The department alleged that the CEO’s conduct also demonstrated that “he was unwilling to cooperate with the ongoing investigation process.”

In February this year, a search operation was carried out by income tax detectives at several Huawei-related premises in India.

In an affidavit filed in response to a motion filed by Huawei India CEO Li Xiongwei seeking the cancellation of the LOC issued against him, the IT department alleged that the CEO deliberately attempted “to deny access to the books accounts, emails or key people in the company”.

The voluminous affidavit, seen by ET, said the CEO “constantly denied and delayed ongoing (research) proceedings, even to the point of withholding access to the emails of the remaining company’s chief financial officer (CFO). outside of India”.

He said “the rights of an individual must be balanced with safeguarding the interests of prosecution and investigative bodies”.

The department said the LOC was issued after reviewing the actions of the CEO, which “led to a substantial belief that he wished to evade the investigation” against Huawei Telecommunications (India).

The department argued that “the right to travel is not an absolute right and that reasonable restrictions may be imposed on it”.

He urged the court to dismiss the CEO’s motion and ask him to go to a lower court and explain the circumstances compelling him to travel abroad. He maintained that the COL issued against the CEO is “correct and in accordance with the provisions of the law”.

Huawei denied the accusations of non-cooperation. In a statement released to ET on Wednesday, Huawei’s India unit said it fully cooperates with authorities and has submitted information and clarifications required by authorities from time to time.

ET was the first to report on May 25 that Li, a Chinese national, was arrested at New Delhi airport on May 1 and was not allowed to board a flight to Bangkok to attend a meeting on behalf of Huawei Telecommunications (India). His boarding pass was canceled and not returned to him.

In his petition challenging the LOC, Li called the IT department’s action “a blow” to his reputation “as well as the reputation of Huawei India”.

In its response, the IT department said that Li was not entitled to invoke the extraordinary jurisdiction of the High Court because his petition was not admissible because the complaint against M/s Huawei Telecommunications (India ) had already been filed.

ET reported on June 10 that a lower court had summoned Huawei Telecommunications (India), Li and three senior company executives in connection with a lawsuit filed by the department alleging they were withholding information that had been sought. .

Li had alleged that the witnesses in the search proceedings were “not local residents”. Calling the allegation “completely baseless,” the department argued that “at no time during said search did the petitioner (CEO) raise any grievance or note of apprehension toward any witnesses present at the scene.” .

The affidavit adds, “Furthermore, nothing has been entered into the record to suggest any impropriety that occurred as a result of the witnesses.” The department said said claim is “purely academic.”

The affidavit states that in previous years, Huawei India had made substantial transactions with its nine group companies/associates in the form of “royalty payments, technical services, purchase of traded goods, etc. “.

The nine companies are: Huawei International Pet Ltd; Huawei technology investment; Shenzhen Smartcom Company; Huawei International; Huawei device (Hong Kong); Huawei device (Shenzhen); Huawei device; Smartcom (Hong Kong) and Huawei Technologies (Thailand).

The department said that in the case of procurement of traded goods, raw materials and spare parts, the transaction amount exceeded Rs 19,000 crore in the previous six years.

“The nature of the transactions and his reliance on the group companies show that the petitioner is entirely dependent on the parent entities in his day-to-day operations,” the affidavit states.

Martin E. Berry