Delhi Liquor Scam: Kavitha figures in ED's remand report; agency says MLC is member of 'South Lobby'

Hyderabad: Trouble seems to be mounting for TRS MLC Kalvakuntla Kavitha after her name figured in the Enforcement Directorate (ED's) remand report of Delhi Liquor Policy Scam accused Amit Arora.

ED has named Kalvakuntla Kavitha as one of the key members of the 'South Group'. ED said as per the investigation carried out so far, arrested businessman Vijay Nair, on behalf of AAP leaders, at least received kickbacks to the tune of Rs. 100 Crore from a group, called 'South Group' (controlled by Sarath Reddy, K Kavitha, Magunta Srinivasulu Reddy). The same has been disclosed by Amit Arora in his statements.

ED has arrested Amit Arora, a Gurgaon-based director of Buddy Retail, and charged him with taking undue advantage. Arora was produced before the court which sent him to ED custody for 14 days.

According to the remand report, Vijay Nair in collusion with Dinesh Arora and Amit Arora arm twisted a few wholesalers to surrender their L1 licenses. They then coerced the manufacturers to choose the wholesalers of their choice and divert the profit margins to their chosen persons (who agreed to fulfill the kickback demands).

ED's investigation into money laundering revealed that the New Delhi liquor policy was introduced by a few leaders of the Aam Aadmi Party to generate money at the cost of the state government exchequer.

ED said the policy was formulated with deliberate loopholes and an inbuilt mechanism to facilitate illegal activities. ED said the policy was marred with deliberate inconsistencies which when looked at deeply, reflect the malafide intentions of the policymakers.

This policy, in reality, promoted cartel formations through back door, awarded exorbitant wholesale (12%) and huge retail (185%) profit margins, and incentivized other illegal activities on account of the criminal conspiracy of AAP leaders.

The 12% profit margin to the wholesalers was devised to extract half of it as a kickback to the AAP leaders. The device through which the political leaders of AAP received kickback functioned at three levels.

ED said the policy was made restrictive to force the manufacturers to select only one L1 wholesaler as their sole distributor. The licence granted to L1 wholesalers was on an application basis. The same could be granted to anyone who was eligible as per the terms and conditions of the L1 wholesalers.

Further, in order to circumvent even the relaxed criteria, it was allowed for the L-1 wholesalers to include manufacturers' turnover in their turnover for meeting the eligibility criteria. Though it appears fair and open opportunity that any entity qualifying the criterion could operate as an L1 wholesaler, the financial feasibility of the business depended on the manufacturers who would choose them as their distributor.

The profitability and turnover of any wholesaler were dependent on the choices and decisions of the manufacturers with respect to who to award their distributor business. Thus the manufacturers were in a dominant position to direct the unprecedented and exorbitantly high-profit margin of 12% toward any select wholesaler. Further, the manufacturers seemingly were supposed to take this crucial decision on their own as per their choice.

However, this investigation has revealed that Pernod Ricard, one of the biggest manufacturers having approximately 47% market share in the country, also a subject of the ongoing investigation, was in fact coerced and directed by Vijay Nair (who used to introduce himself as OSD to the Excise Department), to give their wholesale distribution business to the Indo Spirits (L1 wholesaler).

On account of the conspiracy, the government lost the revenue of 12% - Rs. 581 crore that would have accrued in case the Expert Committee recommendations were accepted by the government, which in the subject policy was assigned to the Private Players only to fill the personal coffers of the AAP leaders. This loss to the government exchequer actually got illegally diverted into ostentatious profits to the wholesalers, which was used to recoup the kickbacks paid in advance by the South Group.

Vijay Nair is not an ordinary worker of the AAP but a close associate of Arvind Kejriwal, the CM of Delhi. Vijay Nair, as per his statement under section 50 of PMLA, 2002, functions from the camp office of Arvind Kejriwal. Further, Vijay Nair since 2020, has been residing in the government bungalow allotted to Cabinet Minister Kailash Gehlot, as part of the GoM of Excise Policy 2021-22. Vijay Nair does not have any other residence in Delhi. Irony being. Gehlot lives at another private residence in Najafgarh.

These facts are relevant to mention so to establish the abatement of actions of Amit Arora, who played a crucial role in the whole scam. He has been instrumental in connecting the cartels of manufacturer/wholesaler/retailer to the political leadership and facilitating 6% kickbacks by working closely with Dinesh Arora and Vijay Nair who were working on behalf of AAP leaders.