Why has a Telangana MLC been arrested in the Delhi excise policy case? What exactly is this ‘scam’, in which senior AAP leaders Manish Sisodia and Sanjay Singh are in jail, and Chief Minister Arvind Kejriwal has been issued several summons?
What is the Delhi excise policy case?
The case arose out of a report submitted by Delhi Chief Secretary Naresh Kumar to Lieutenant Governor (LG) Vinai Kumar Saxena in July 2022, pointing to alleged procedural lapses in the formulation of the policy.
The report said “arbitrary and unilateral decisions” taken by Sisodia in his capacity as Excise Minister had resulted in “financial losses to the exchequer” estimated at more than Rs 580 crore. It alleged that “kickbacks…received by the AAP Delhi government and AAP leaders” from owners and operators of alcohol businesses for preferential treatment such as discounts and extensions in licence fee, waiver on penalties and relief due to disruptions caused by the Covid-19 pandemic, etc. were used to “influence” the Assembly elections held in Punjab and Goa in early 2022. The AAP went on to form the government in Punjab.
This report was referred to the CBI, and led to Sisodia’s arrest. Then, once the CBI named Sisodia and 14 other accused in its FIRthe ED told a court in March that the alleged proceeds of crime amounted to more than Rs 292 crore, and that it was necessary to establish the modus operandi.
The ED alleged that the “scam” was to give the wholesale liquor business to private entities and fix a 12% margin, for a 6% kickback. In its first prosecution complaint in November 2021, the ED said the policy was “formulated with deliberate loopholes” that “promoted cartel formations through the back door” to benefit AAP leaders.
The ED also alleged that AAP leaders received kickbacks to the tune of Rs 100 crore from a group of individuals identified as the “South Group”.
What is the ‘South Group’ in the Delhi excise policy case?
Kavitha, 46, the daughter of former Telangana Chief Minister K Chandrasekhar Rao and a former MP herself, has been arrested allegedly for being part of this ‘South Group’. Others alleged to be part of the group include Creditors MP Magunta Srinivasulu Reddy's son Raghav Magunta, P Sarath Chandra Reddy, son of PV Ramprasad Reddy and co-founder of Hyderabad-based Aurobindo Pharma.
According to the ED, this group “secured uninhibited access, undue favours, attained stakes in established wholesale businesses and multiple retail zones (over and above what was allowed in the policy)”. The ED complaint states that to “recover kickbacks given by the “South Group”, partners of the “South Group” were given a “65% stake in M/s Indospirit” in collusion with its owner Sameer Mahendru, also an accused in this case.
The ED and the Income Tax department had in the past issued notices to Kavitha to appear before them to record her statement, but she had appealed in the Supreme Court against the notices and refused to appear. On Friday before her arrest, both central agencies searched her residence.
When Kavitha was produced before the Special Judge for ED cases on Saturday, the ED told the court, “It is evident that Ms K Kavitha is involved in the acts of payment of kickbacks to Govt functionaries to gain illegal benefits in the Excise Policy 2021-22 formulation and implementation… Ms K Kavitha is actually involved in the transfer of PoC [proceeds of crime] of Rs. 100 Cr… which was paid to the AAP leaders.”
What has K Kavitha said about the allegations against her?
Kavitha has denied the allegations, and described the ED notices to her as “Modi notices”. In an interview to The Indian Express just before the Telangana elections last year, when asked about the alleged scam, she had said, “I had no role in it. They have made sweeping allegations and put the burden of proof on me … But we are fighting it. We are talking about state excesses and the misuse of agencies.”
