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Arvind Kejriwal was directly involved in formulating excise policy, taking bribes and using the money, money sent to Goa via Hawala: Here is what ED told the court

The ED has explained in detail that AAP fits with the definition of ‘company’ as per the act, and as the National Convenor and member of the National Executive, Arvind Kejriwal was ultimately responsible for the funds being used in the election expenses including their generation.

The court of Judge Kaweri Baweja of Rose Avenue Court in Delhi on Friday sent Delhi CM Arvind Kejriwal to ED custody till 28th March, a day after his arrest in the Delhi liquor policy scam. OpIndia has accessed the application filed by the Enforcement Directorate with the court seeking his 10-day custody, and the application reveals significant details of the case, including the direct involvement of Kejriwal with the scam.

As per ED, the liquor wholesalers who won L-1 licenses under the now-scrapped policy had issued credit notes to the retailers with an intention to divert money to officers, and they made false accounting entries to keep their records in order. Amit Arora and Arjun Pandey are close associates of Manish Sisodia and they were actively involved in managing and diverting the money collected from the liquor vendors to public servants.

ED has cited banking transactions showing how money from the L-1 licence holders was moved to people linked to Delhi govt officials.

The Delhi Excise Policy

Giving the background of the case and the policy, ED states the new excise policy was implemented to eradicate the sale of spurious and non-tax paid liquor, to transform consumer experience, and also to simplify the complex heavily regulated previous excise regime. Its objectives included the prevention of monopolies, ensuring equitable access to liquor supply, ensuring accountability, checking smuggling and bootlegging etc.

One of the main features of the new Excise Police was that an entity holding an L-1 wholesale licence can’t be a manufacturer/winery/brewery/ bottling plant etc anywhere in the country, either directly or through sister entities. Similarly, the policy said that an entity holding a wholesale license shall not hold any retail license directly or indirectly, and the wholesalers will only supply to zonal retail licence holders, which included L-7Z, L-7V & L-7SP1 licences.

The wholesale licences were issued by the Excise Department on an application basis and the retail licences for 32 zones were issued on the basis of tender floated by the Excise Department.

As per the policy, if the same entities hold both wholesaling and manufacturing/retail licences, there is a possibility of the formation of syndicates, leading to unethical trade practices like overcharging, pushing certain brands etc. However, it was decided that no entity will be allocated more than 2 zones to ensure that there is no market capture and cartelization.

The scam

However, when the new excise policy was implemented, it violated the norms of the policy from the beginning. It was found during the investigation that cartels were formed, and single entities effectively controlled manufacturing, wholesale as well as retail entities in the liquor business. As per ED, Manufacturers, wholesalers and Retail zone licensees were involved in the cartels. “Each cartel Consists of huge no. of entities, persons, etc. including proxy ownership, sleeping partners, hidden investments etc,” ED further stated.

Talking about CM Arvind Kejriwal’s role in the scam, ED said that he “is the kingpin and key conspirator of the Delhi Excise Scam in collusion with Ministers of Delhi Govt, AAP leaders and other persons.” The agency alleges that Kejriwal was involved in the conspiracy of formulation of the Excise Policy 2021-22 to favour certain persons and also involved in demanding kickbacks from liquor businessmen in exchange for favours granted in the policy.

ED further alleges that Arvind Kejriwal is involved in the use of proceeds of crime in the Goa election campaign of the AAP, to which he is the Convenor and the ultimate decision maker.

Giving details of the role of Kejriwal, ED says that he was involved in the formulation of the Excise Policy 2021-22, and it was drafted considering the favours to be granted to the South Group. Vijay Nair, Manish Sisodia and members-representatives of the South Group were directly involved in the formulation of the police, ED says.

As evidence of these charges, ED cites the statement of C Arvind, then secretary of Manish Sisodia, who revealed that in March 2021, Sisodia had called him to the CM’s residence and handed over 30 pages of document, which was a draft Group of Ministers report on excise policy. Satyender Jain, Manish Sisodia and Arvind Kejriwal were present at this meeting. Sisodia told C Arvind that the final GoM report is to be made on the draft report given to him.

The draft said that wholesale licences should be given to agents (private players) of manufacturers one wholesale licensee can be a distributor for any number of manufacturers and the wholesale profit margin was fixed at 12%. These things were never discussed in the GoM meetings and went directly against what was decided regarding the policy earlier.

The secretary prepared the report as directed and handed it over, after which the same was finalised by the Delhi govt.

ED further states that Buchi Babu, CA of BRS leader K Kavitha, has revealed that Arun Pillai was working with Vijay Nair on the policy formulation and was offering provisions for favouring K Kavitha. And, Nair was working for Sisodia and Kejriwal for the same. This has been corroborated by the WhatsApp messages retrieved from the mobile phone of Buchi Babu. In the messages, certain provisions of the Excise Policy were found 2 days before the Excise Policy document was finalised by the GoM and the Council of Ministers of the Delhi govt.

Budhi Babu told ED that these portions of the upcoming policy were sent to him and Arun Pillai by Viyay Nair. The chats also show that Nair was proposing favours in the policy for the South Group, ED adds.

Demanding bribe for election funding

Not just formulating the policy designed to favour certain entities, Arvind Kejriwal was also actively involved in demanding money in exchange for this favour, ED alleges in the remand application. YSR Congress MP Magunta Srinivasulu Reddy told ED that when he saw that Delhi was privatising the liquor business, he decided to apply for a licence as they had been in the same business for 71 years in South India.

In this regard, Telangana CM K Chandrshekhar Rao’s daughter K Kavitha met him, and talked about paying ₹100 crore to AAP in exchange of getting a licence. She told him that her team was already in Delhi working on the matter. He then met Arvind Kejriwal in Delhi, and they had a cordial talk, where the CM said that his govt welcomes everyone to do business in Delhi. During the meeting, Arvind Kejriwal told him that K Kavitha will talk to him about it in detail.

Later, Kavita met Reddy and told him that Kejriwal has spoken to her about him, and asked him if he could arrange ₹50 crore for AAP to fight elections, out of a total ₹100 crore needed to be paid. As Reddy was busy with work as an MP, he asked his son Raghav Magunta to deal with Kavitha. After some time, Magunta said that he had agreed to pay ₹30 crore to K Kavitha. Later Raghav Manuta paid ₹25 crore to Kavita’s aides Buchi Babu and Abhishek Boinpalli.

Raghav Manuta has also confirmed the same, saying that he paid ₹25 crore in cash to Abhishek Boinpally and Buchi Babu as per the agreement between K Kavitha, himself and his father Magunta Srinivasulu Reddy. He said that the payment was made in two batches, ₹10 crore on 28 March 2021 and 15 crore in June 2021. Notably, both Magunta Srinivasulu Reddy and his son Raghav Manuta have turned approvers in the case.

Raghav further said that K Kavitha’s team was working with Arvind Kejriwal and Manish Sisodia on the new excise policy, and Vijay Nair was coordinating among them.

Sarath Reddy, the director of Aurobindo Pharma, has also revealed details about the scam. He said that he met Arvind Kejriwal in Vijay Nair’s house who was residing near the Delhi CM’s residence. Kejriwal asked him to trust Nair regarding the liquor licence, talked about the new policy and said that it would be win-win for both.

As per ED, Vijay Nair is not in any official post, and he was working as a broker/liaison/middleman on behalf of the top leaders of the AAP, especially Arvind Kejriwal, for getting bribes/kickbacks from various stakeholders in the Delhi Liquor business in exchange of favourable changes in the Delhi excise policy. Nair even threatened that those who don’t agree will not get any favours.

Vijay Nair has revealed that he lived at a government bungalow without any official authorisation, and the house close to the Bungalow of Arvind Kejriwal was officially allotted to Cabinet Minister Kailash Gehlot. Moreover, Vijay Nair operated from the Camp office of Arvind Kejriwal. Nair was the man who received ₹100 crore from the South Group on behalf of Arvind Kejriwal and AAP.

In exchange for the kickbacks, the South Group members got control of the wholesaler business Indo Spirits and even retail zones and got the business of Pernod Ricard. They were granted an L1 license despite multiple complaints and being in violation of the Excise Policy 2021-22, the ED said.

Use of bribe money

The Delhi CM also was involved in the utilisation of money received as a bribe from the liquor cartel. ED has found evidence showing that ₹45 crore from the bribe money was used in the election campaign of AAP in Goa. This was done by ‘part cash part bill’ payments to vendors by Mis Chariot Productions, the agency engaged by AAP for the outdoor campaign in Goa. The vendors made bills for only a part of the total due amount, and the rest amount was paid in cash.

ED has produced chats between a vendor Sparks Entertainment with Chariot, where the vendor was told that payment would be made in both modes, cash and billing. While the vendors received the billed amount via regular channels, they received the cash portion through the Hawala route. Islam Qazi of Grace Advertising confessed that he was paid ₹6.29 crore through Hawala operators in Mumbai’s Malad. Several other vendors who received cash payments from AAP via hawala are mentioned in the ED remand application.

When the Income Tax department raided the Goa office of Angadiya operator R Kantilal, the seized documents revealed that approximately ₹45 crore was transferred to Goa via Hawala. The Hawala train of this amount was also probed by the CBI, which have been mentioned in the charge sheet filed by the agency.

An employee of Chariot Productions has also revealed that he handed over huge cash amounts to three persons who were working on AAP’s election campaign in Goa. The ED has found that the money reached Goa in four routes, approximately ₹12 Crore from Ashok Chandu Bhai of Asheel Corporation, ₹7.1 Crore from Devang Solanki of K S Enterprise, ₹16 Crore from Kirti Amba Lal, ₹7.5 Crore from Neelkanth and ₹2 Crore Ma Ambey. The relevant persons have confirmed the same in their recorded statements.

Apart from agencies, individuals working on the AAP campaign also have said that they were paid in cash. People working as Survey workers, Area managers, Assembly managers etc. were paid through cash. They were working in Vijay Nair and Delhi AAP MLA Durgesh Pathak. Moreover, an AAP candidate for Goa election has also confirmed receiving cash for election expenses.

Crime under PMLA

ED has said that Aam Aadmi Party (AAP) is the major beneficiary of the proceeds of crime generated in the Delhi Liquor Scam. Apart from ₹45 crore from it for Goa elections, the party and Arvind Kejriwal is also guilty of money laundering under Section 70 of PMLA.

Section 70 of PMLA states, “Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished according.”

The ED has explained in detail that AAP fits with the definition of ‘company’ as per the act, and as the National Convenor and member of the National Executive, Arvind Kejriwal was ultimately responsible for the funds being used in the election expenses including their generation.

“Arvind Kejriwal was and is not only the brain behind the AAP but also controls its major activities, he was also one of the founding members and was also involved in the decision-making of the policy as evident from the statements of the witnesses. He is also involved in demand of kickbacks which have inter-alia generated further proceeds of crime,” ED states in the remand application. He in charge of the party when the crime took place, therefore he shall be deemed to be guilty of offences punishable u/s 4 of PMLA and shall be liable to be prosecuted and punished as provided u/s 70 of PMLA, the ED has argued.

The agency states that the violation of PMLA took place with Kejriwal’s knowledge and he didn’t do anything to prevent it. The ED stated before the court, “it is established that Sh Arvind Kejriwal who is the ultimate in charge of the AAP and was intrinsically involved in the acts of policy formulation, kickback scheme and the final use of the proceeds of crime thus generated including conspiracy thereof. Therefore, he is also liable for use of the PoC of Rs. 45 Cr in the election campaign of the AAP in Goa under section 70(1) of PMLA, 2002 apart from his role in his personal capacity.”

While ED sought 10 days custody of Arvind Kejriwal, the court granted them 6-day custody of the CM, up to 28 March.

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Raju Das
Raju Das
Corporate Dropout, Freelance Translator

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