ED Picks Up Proof in Rs 4,000-Cr AP Liquor Scam

Hyderabad: The Directorate of Enforcement (ED), which raided 20 locations in connection with the Rs 4,000-crore Andhra Pradesh liquor scam, has found that the accused persons discouraged orders for established liquor brands, withheld legitimate payments and coerced distilleries into paying illicit kickbacks in exchange for Order for Supply (OFS) approvals.

The searches, conducted under the Prevention of Money Laundering Act (PMLA), 2002, covered Hyderabad, Bengaluru, Chennai, Thanjavur, Surat, Raipur, Delhi NCR and multiple locations in Andhra Pradesh. The agency seized unaccounted cash worth Rs 38 lakh from one of the premises.

ED officials said part of the payments made by the AP State Beverages Corporation Limited (APSBCL) to suppliers were diverted to various entities on the pretext of supplying goods or services. Many of these transactions were bogus, involving non-existent or shell companies. In some cases, the transactions were inflated, with funds later diverted to jewellers for gold purchases and converted to cash that was handed back as kickbacks.

The ED recovered incriminating material, including fake invoices, parallel bills reflecting inflated prices, transport challans showing bogus vehicle numbers and chat records suggesting the involvement of individuals based in Dubai. The seized evidence pointed to large-scale generation and movement of illicit funds.

The case originated from an FIR filed by the AP CID alleging a Rs 4,000 crore loss to the state exchequer under the new liquor policy from October 2019 to March 2024. The CID accused the beneficiaries of “brand killing and new brand promotion,” sidelining popular labels that refused to pay bribes while promoting spurious brands for hefty payments.

The AP government constituted a Special Investigation Team (SIT) in February, which has since filed chargesheets and supplementary reports. The SIT has filed a chargesheet and supplementary chargesheets, alleging that automation in procurement was replaced with manual approvals to allow manipulation of brand-wise indents, supply volumes and eligibility norms. It accused officials of favouring a select group of distilleries and marketing firms, coercing suppliers into paying 15-20 per cent of their invoice value as kickbacks, failing which their brands were suppressed or delisted. The SIT further alleged that creating shell distilleries to channel funds and secure inflated OFS volumes, appointing key officials who facilitated brand approvals, manipulated eligibility norms and suppressed dissenting suppliers.

The chargesheets also allege that kickbacks were generated through procurement manipulation, fake vendor payments, shell companies and were used for election purposes, personal benefit and transfer of funds abroad.