ED provides more details of South Group role in Delhi liquor scam to a Delhi court

IndoSpirits of accused Sameer Mahendru was the key company through which South Group operated, the ED said.

BySouth First Desk

Published Feb 12, 2023 | 1:22 PMUpdatedFeb 12, 2023 | 1:22 PM

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The Enforcement Directorate (ED), which is probing the Delhi liquor scam, said the main arm of the entire Delhi liquor scam rests on the conspiracy orchestrated by the so called “South Group” with the leaders of the Aam Aadmi Party (AAP).

In the conspiracy, leaders of a few political parties have been found to be involved using proxies, dummies and web of exchanges/transactions to conceal their involvement, the ED said in the remand report of Raghav Magunta which it filed in the Rouse Avenue Court in Delhi on Saturday, 11 February.

The “South Group”, according to the ED, comprised YSRCP Ongole MP Magunta Srinivasulu Reddy (MSR), his son Magunta Raghava Reddy, and BRS MLC K Kavitha — who were represented by businessman Arun Ramachandra Pillai — a[art from Hyderabad businessman Abhishek Boinpally, chartered accountant Butchibabu Gorantla, and leading pharma company director P Sarath Candra Reddy.

Related: ‘ED forced witnesses to sign pre-dictated statements’

‘South Group’ role explained

Explaining the role of “South Group” in the scam, the ED said the members of the group and their representatives were regularly meeting each other and other members of the Delhi liquor trade.

The new Excise Policy of 2021-22 was brought out with an extraordinarily high 12 percent profit margin for wholesalers and almost 185 percent profit margin for the retailers. As a scheme, six percent out of 12 percent margin was to be collected back from wholesalers as kickback to the leaders of the AAP.

According to the ED, the “South Group”, however, paid the kickback, to the tune of ₹100 crore, in advance to Vijay Nair, who is communications in-charge of AAP and was managing the entire scheme and conspiring on behalf of the leaders of the AAP.

In lieu of the advance kickback payment, Vijay Nair ensured that the “South Group” secured stakes in wholesale businesses as they had no toehold in Delhi liquor business. He ensured that they were allowed to hold multiple retail licenses over and above what was permissible as per the excise policy and that they were given other undue favours.

According to the remand report, Sameer Mahendru formed IndoSpirits as a partnership with 65 percent given to the representatives of the “South Group” — Arun Pillai and Prem Rahul Manduri, who represented Kavitha and Raghava and MSR, respectively in this partnership firm.

Related: CBI arrests ex-chartered accountant of BRS MLC K Kavitha

Control of IndoSpirits

The nominal investments made by Arun Pillai and Prem Rahul Manduri are linked with their actual investors, the ED said.

Further, Sameer Mahendru was directed by Vijay Nair to give this partnership share to these persons and that he would ensure that liquor major Pernod Ricard’s wholesale business was awarded to IndoSpirits. Even the L1 application of IndoSpirits was treated specially by the top leaders of the AAP.

Arava Gopi Krishna, the then excise commissioner of Delhi, in his statement dated 26 December, 2022, said that C Arvind, then secretary of Delhi Deputy Chief Minister Manish Sisodia, had communicated to him for expediting the L1 license of IndoSpirits.

Gopi Krishna has further revealed that, he was also called by Manish Sisodia into his office and told to award the L1 license of IndoSpirits despite the fact Gopi Krishna had appraised Sisodia about the complaint of cartelisation because of which the file was being examined, the ED has said.

According to the ED, Manish Sisodia told him sternly to ensure that the license was granted to IndoSpirits as early as possible. Therefore, IndoSpirits was a special purpose vehicle created to facilitate the recoupment of the kickbacks of ₹100 crore paid by the “South Group” to the AAP in advance.

IndoSpirits got Pernod Ricard’s wholesale business and that itself made the profitability of that business extremely high.

Biggest cartel in Delhi

This was compounded the fact that the members of the “South Group” further got control of total nine retail zones, including two retail zones of Raghava Magunta, thereby making it the biggest cartel controlling almost 30 percent of the liquor business in Delhi and also a self-sustaining mechanism for the “South Group” to recover their kickbacks paid in advance, according to the ED.

Dinesh Arora, a close associate of Vijay Nair, in his statement dated 1 October, 2022, revealed that the “South Group” was supposed to get its advance money back from three major wholesalers. He too told the ED that IndoSpirits was an entity controlled by the “South Group”, therefore the recoverable money was directly in their control.

Dinesh Arora also revealed in his statement on 18 November, 2022, that Vijay Nair, through his interaction with Benoy Babu of Pernod Ricard, ensured that Pernod Ricard’s business was given to IndoSpirits in exchange for the ₹100 crore paid by the “South Group”.