CID registers new case against Naidu over alleged manipulation of Andhra Pradesh liquor policy

The case was booked based on a complaint lodged by D Vasudeva Reddy, Commissioner of Distilleries and Breweries, and Managing Director, Andhra Pradesh State Beverages Corporation Ltd (APSBCL).

The FIR has been submitted to the Anti-Corruption Buearu (ACB) Court in Vijayawada.

Details of the FIR

According to the FIR, after preliminary enquiry, as per instructions of Additional DGP of CID, AP Mangalagiri, memo vide C.No.5134/EOW/C- 12/CID-AP/2023, dated 28 October 2023, a case in Crime No. 18/2023 under Sections 166, 167, 409, 120(B), read with 34 of the Indian Penal Code and Section 13(1)(d) R/w Sec.13(2) of Prevention of Corruption Act, 1988 was registered at the CID police station in Mangalagiri, Andhra Pradesh.

According to the FIR, the offence took place at the Andhra Pradesh Secretariat at Velagapudi, Amaravati, prior to June 2019. The TDP was in power in the state from 2014 to 2019.

The FIR said that the APSBCL, a statutory entity with monopoly over the liquor distribution in the state, undertook a periodic review of the policies, in pursuance of the policy of the state for progressive prohibition.

The APSBCL has been working in consonance with the policy decisions of the state since 2015. While undertaking a review of the earnings and revenue for the state at the relevant point in time, during 2014-2019, some glaring policy decisions came to light, which reduced the revenues for the state and benefitted licencees, the FIR said.

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Some distilleries were favoured

It was also found that, contrary to the recommendations of a committee constituted for this purpose by the government of Andhra Pradesh, a few distilleries were favoured by giving them a letter of intent (LOI). New brands were permitted by the public servants, after a notification, dated 18 March, 2019, for general election was issued.

According to the FIR, it was also startling that the suppliers, in conspiracy and collusion with licencees, exaggerated the demand for certain products, without there being a market demand for the same, thereby resulting in distorted projection being given to the APSBCL.

There being no mechanism for verification of the actual demand, the data of the supplies and the quantities for the relevant period — 2015-2019 — shows that a few companies were preferred, and orders were placed for their products, “disproportionate to their market share to the extent of 70 percent of the brands being garnered by identified individual suppliers”.

The procurements undertaken clearly show that, as “part of a prior concert, design, and common intention, perhaps with the participation of various public servants at various stages of decision-making”, unlawful pecuniary gain was conferred to a few entities, it was stated in the FIR.

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Loss to exchequer

A detailed study of the decisions taken between 2014 and 2019 to help APSBCL recommend suitable policy changes for the future, clearly pointed to specific instances of such decisions resulting in loss of revenue to the government and pecuniary gain to the licencees.

“In the draft performance report, Principal Accountant General (Audit) infraction-resulted loss to the exchequer are noted and this is in the public domain. A detailed enquiry/investigation is essential to unravel the criminality in the decision-making process, criminal conspiracy, and intent to violate the rules and orient the policy decisions to suit the pecuniary interests of the licencees,” the FIR read.

The statutory rules in regard to imposition of privilege fee on A4 Shop Licencees was introduced in the year 2012. The privilege fee prescribed being 8 percent plus VAT on the turnover of purchases by the said shops if their purchases exceeded six times of the annual licence fee.

In order to evade such imposition, the licencees resorted to disguised sales, accounting manipulations regarding sale of stocks, the FIR stated.

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Initiative to incentivise compliance ignored

While deciding policy for the excise years 2015-2017, it was initially proposed that the threshold limit for imposition of privilege fee be enhanced to be applicable only if the purchases exceed 10 times the annual licence fee so that there is incentive for compliance with the statutory rules, the FIR said.

This was to rationalise revenue collections and to motivate licencees to abide by the statute and to disincentivise the inclination to under-record and manipulate the record of sale by licencees.

However, this initiative was not followed through.

While forwarding inputs for finalisation of the policy for A4 shops to the Cabinet, only salient features of the excise policy were taken into account.

The Cabinet note “laconically refers to the broad outline of the decisions as salient features of the policy on 17 June 2015 primarily regarding the methodology of allotment of shops by drawal of lots, running of 10 percent shops by the Corporation, and the new eligibility criteria to be fixed, as indicated in the series of Cabinet notes circulated for the above”.

The process was initiated on 22 June, 2015, for the amendment of Licence Rules without any discussions about any financial implication and in utter disregard to the procedure prescribed, the FIR said.

The proposal submitted for the amendment of statutory rules was moved on 22 June, 2015, which contained the draft rules to be amended, “including the deletion of Rule 16(9) of the Licence Rules, 2012, thereby removing the existing privilege fee on shop licencees”.

On the this proposal, the statutory rules in GO Ms No 218 dated 22 June 2015 was issued deleting Rule 16(9) of the Licence Rules comprised in GO Ms No 391 dated 18 June 2012.

“It is to be seen that to secure such deletion of the privilege fee, contrary to the initial proposal to continue the privilege fee if the purchases cross 10 times the annual licence fee, the said rule was notified removing the privilege fee altogether.”

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Detailed probe needed 

“It is curious to note that the earnings of the government on account of the privilege fee between 2012 and 2015 was ₹2,984 crore,” The FIR said.

A loss of earnings to the government was the immediate consequence of the decision, the FIR said.

Also, as the decision to “delete the privilege fee did not form part of the excise policy deliberations forwarded to the Cabinet”, an in-depth investigation is required to unravel the nexus between the decision taken by the persons who were at the helm of affairs and the stakeholders during that time, the FIR said.

“In light of the above, a detailed probe into the matter is needed in the public interest and to take penal action against those responsible for it,” the FIR said.

Naidu is already under arrest by the CID in connection with the alleged ₹371 crore AP State Skill Development Corporation scam and has been lodged in the Rajamahendravaram Central Prison for more than 50 days now.

Naidu is also facing allegations in the Fibernet and the Inner Ring Road alignment cases.