The allegations and argument that one of the accused-turned-approvers in the Delhi excise case—in which Chief Minister Arvind Kejriwal is now in ED custody—was acting on political directions, since he had donated money to the Bharatiya Janata Party through electoral bonds, is unlikely to hold much water in the court of law.
The accused-turned-approver, P. Sarath Chandra Reddy, director of the Hyderabad-based Aurobindo Pharma, was arrested by the ED in November 2022. He turned approver in the excise case in June 2023.
In this seven-month period, Aurobindo Pharma donated Rs 5 crore to the BJP, five days after Reddy was arrested. The said company gave another Rs 25 crore to the BJP through electoral bonds after Reddy had turned approver.
This series of events is being cited as proof that Sarath is “biased” and had turned approver because of political pressure and hence his testimony as approver should not carry weight.
However, while the said accused was arrested by the Enforcement Directorate (ED) in November 2022, the Central Bureau of Investigation (CBI), on whose First Investigation Report the ED has based its investigation, had completed its investigation much before that.
Apart from relying on its investigation, the ED’s findings in the case are based on the report that was submitted to Delhi Lieutenant General by Delhi Chief Secretary in July 2022, which formed the basis of the CBI FIR.
The very first official document related to the investigation in the case, that was carried out by Delhi Chief Secretary Naresh Kumar, was submitted to LG V.K. Saxena, on 8 July 2022.
The said inquiry report had, in great detail, explained how and why the excise policy was flawed and why there was a strong suspicion that alleged financial irregularities were committed and undue favour extended to favourite vendors.
The report has no mention of either Aurobindo Pharma or Reddy.
It was on the basis of the findings of Naresh Kumar that the LG, on 20 July, wrote to the Union Home Secretary recommending a CBI probe in the manner in which the Delhi government had amended the Delhi excise policy on 15 April 2021 and 21 May 2021, which was notified on 31 May 2021.
The CBI registered a formal FIR in the case on 17 August 2022. The CBI’s initial report in the case too, building on what Naresh Kumar had found in his investigation, also contains significant details on how the alleged corruption was executed.
However, neither Naresh Kumar’s report, nor the CBI’s FIR mentions the name of P. Sarath Reddy as an accused in the case, clearly indicating that his alleged involvement in the case, at the time, was not discovered.
The CBI had named 15 accused in the FIR. Among those who were named in the case included a top management official with a New Delhi-based news channel.
As per Kumar’s findings in the case, which came much before the ED investigation came into the picture, private employees representing alcohol manufacturing and marketing companies had colluded with people closely and officially associated with the Delhi government and the Aam Aadmi Party to frame the excise policy of Delhi in a way which would help their business.
Kumar had further found that decisions were taken at the level of the Council of Ministers to modify the Excise Policy without obtaining the opinion of the Lt Governor, as mandated by the Government of NCT of Delhi Act, 1991 and Order.
Similarly, major changes in the annual licence fee and changes in methodology to calculate the licence fee were approved by Delhi cabinet in June 2021, without informing the Lt Governor.
What also gave rise to suspicion was that the Excise Department decided to refund Earnest Money Deposit of Rs 30 crore to a successful tenderer of an outlet at airport zone, as he was not able to obtain a no objection certificate from the Airport Authorities. However, as per Rule 48(11)(b) of the Delhi Excise Rules, this money should not have been refunded as the successful tenderer is required to complete all formalities for grant of licence, failing which all deposits made by him stands forfeited to the government.
In the same vein, the department did not take coercive action against retail licensees despite them defaulting in payment of the licence fee, interest and penalty for non-genuine reasons. This resulted in undue favour to the licensees.
Similarly, the Excise Department in November 2021, revised the formula of calculation of rates of foreign liquor and removed the levy of import pass fee @ Rs 50 per case on beer, which made the foreign liquor as well as beer cheaper for retail licensees. As per law, extension of such benefit, post tender, amounts to extending undue favour to licensees.
The Delhi government, as per Kumar’s findings, arbitrarily, extended the period of retail and wholesale licensees without taking the approval of the competent authority. This extension was allowed without any increase in tendered licensee fees.
What also caught the attention of Naresh Kumar was the fact that the Excise Department first floated a tender by incorporating a condition of setting up a minimum of two liquor vends in each ward in Delhi, without undertaking any exercise/due diligence to ascertain the viability of opening a minimum of two vends in each ward. Subsequently, the Department offered the existing licensees to open additional vends in conforming areas in lieu of non-conforming wards without taking approval of the competent authority.
Later, the CBI’s initial investigation found that some of the L-1 Licence holders (licence granted for the wholesale supply of Indian liquor) were issuing credit notes to retail vendors to divert the funds as undue pecuniary advantage to public servants. To justify this, the L-1 holders were showing false entries in their books of accounts to keep their record straight.
All these investigations and findings were done much before either the Enforcement Directorate had come into the picture or any of the people in the case, who are now under investigation, had bought electoral bonds to benefit political parties in question.