From accused turning approvers to Kejriwal's arrest: Decoding the Delhi excise policy case
New Delhi, March 22: Delhi Chief Minister Arvind Kejriwal was arrested by the Enforcement Directorate (ED) on Thursday, following revelations of the use of hawala operators to transfer proceeds for funding elections, meetings and details of the hotels, and statements of approvers, as per sources in the financial probe agency.
As per the ED, Kejriwal, along with other top leaders of his Aam Aadmi Party (AAP), allegedly received kickbacks amounting to Rs 100 crore in connection with the Delhi excise policy, and this money was transferred through a series of intermediaries and middlemen, implicating BRS MLC K. Kavitha and members of the 'South Group' in the process.
Kejriwal had evaded nine summonses by the ED, resulting in the filing of two cases against him under the Criminal Procedure Code (CrPC) in the court.
The accumulation of evidence by the ED ultimately prompted the arrest.
On March 16, the ED, while seeking custody of Kavitha, who was arrested from Hyderabad the previous day and is the daughter of BRS supremo and former Telangana Chief Minister, revealed her alleged involvement as a "key conspirator and beneficiary" in the alleged scam.
The probe agency, in its plea for custody, had alleged that along with other members of the 'South Group' – Sarath Reddy, Raghav Magunta, and Magunta Srinivasulu Reddy, Kavitha conspired with top leaders of the AAP, including CM Kejriwal and his deputy and Excise Minister Manish Sisodia, providing them kickbacks amounting to Rs 100 crore.
"In exchange for the kickbacks paid to the leaders of AAP, she had access to the policy formulation and was offered provisions to ensure a favourable position to her," read the ED’s application before the court.
The ED also alleged that Kavitha further got stakes in the partnership of Indo Spirits, through her dummy Arun Pillai, without substantial investment in this firm and distribution business of Pernod Ricard India Pvt Ltd, which is one of the biggest manufacturers in the country and thus made Indo Spirits, the most profitable L1 in the Delhi Excise policy 2021-22 period and thus recouped proceeds of crime in guise of profits.
"Further, in the policy, the profit margin of the wholesaler was increased to 12 per cent so that out of this margin, a portion of it could be taken back as kickbacks. This was done to create a continuous stream of illegal funds for the AAP in the form of kickbacks from the wholesalers and for the South Group to recover the kickbacks paid and further generate profits from this entire conspiracy," the application claimed.
Sarath Reddy, Raghav Magunta, and Magunta Srinivasulu Reddy had turned approvers in the case.
The ED claimed that Kavitha and the others paid bribes to the top AAP leaders, as per the statement of Srinivasulu Reddy, dated July 14, 2023, recorded under Section 50 of the PMLA and his statement dated July 17, 2023, recorded under Section 164 of CrPC.
As per the statement, submitted in court, Srinivasulu Reddy said that in March 2021, he read in a Delhi newspaper that the city government was privatising the liquor trade, and as they have been in the liquor business in south India for the last 71 years, they had considered expanding to Delhi and sought to meet the CM.
He stated that the CM's office had given him time on the evening of March 16, 2021, and when he met Kejriwal, "he was cordial and said that we welcome everyone in Delhi to do business".
"Regarding the liquor business earlier, Kavitha had already approached me to do liquor business in Delhi and offered to pay Rs 100 crore to the party i.e. the AAP, and she will call you in this liquor business connection or you call her, discuss the future, since already their team is working in Delhi," he said, as per his statement.
The ED, quoting his statement, said Kavitha called Srinivasulu Reddy on March 19, 2021, and asked him to meet her, which he did the next day, and she told him that Kejriwal had spoken to her and asked her to give Rs 100 crore and accordingly, she asked Srinivasulu Reddy to arrange Rs 50 crore for this.
"Kavitha told him that her CA Buchi Babu would visit him and his son Raghav Magunta to coordinate this. Buchi Babu visited them the next day and Raghav Magunta told him that he could arrange Rs 30 crore and finally, Rs 25 crore was paid in cash to Abhishek Boinpally and Buchi Babu on the instructions of K. Kavitha," it said
The ED also said that Magunta, in his statement, dated July 26, 2023, recorded under Section 50 of the PMLA, and another one, dated July 27, 2023, recorded under Section 164 of CrPC, admitted he paid Rs 25 crore in cash to Boinpally and Buchi Babu as per the agreement between Kavitha, himself and his father Srinivasulu Reddy.
The agency claimed that this cash transfer took place in two parts - on March 28, 2021, Rs 10 crore was delivered by Raghav Magunta's staffer Gopi Kumaran to an address given by Buchi Babu in Chennai and in June 2021, an amount of Rs 15 crore delivered by Gopi Kumaran to an address given by Boinpally, and that Gopi Kumaran has corroborated the statement of Raghav Magunta.
The ED further said that Sarath Reddy, in his statement, dated April 25, 2023, recorded under Section 50 of PMLA, 2002 and dated April 29, 2023, recorded under Section 164 of CrPC, said that sometime in March 2021, Arun Pillai contacted him and informed him that there was a new business opportunity in the Delhi liquor business and Kavitha was in discussion with CM Kejriwal and his deputy Sisodia regarding the upcoming policy through Vijay Nair.
"Soon after this discussion with Pillai, Reddy met Kavitha in Hyderabad. Kavitha also told him that she had discussed the matter with Magunta and informed him that her team (Pillai, Buchi Babu, and Boinpally) was already working in Delhi with Nair on this," the ED’s application read, adding that she also told Reddy that Nair would handle all the issues on behalf of Kejriwal and Sisodia.
"The evidence, the letters of the Chief Minister evading the summonses by calling them 'political' and 'illegal' and the cases the agency filed against Kejriwal before the court emboldened the directorate and 'prepared the ground for the sternest legal action," a source said.
The Delhi excise policy scam case stems from a report submitted by Chief Secretary, Naresh Kumar, to Lt Governor Vinai Kumar Saxena in July 2022, hinting at potential procedural irregularities in the policy's formulation. He accused the then Excise Minister Sisodia of making arbitrary and unilateral decisions and contended that the implementation of the new policy led to financial losses for the government, while certain leaders and ministers affiliated with the AAP allegedly received kickbacks.
Two separate cases, one initiated by the Central Bureau of Investigation (CBI) and another focusing on suspected money laundering being probed by the ED, were filed.
The investigation was initially handled by the CBI, resulting in Sisodia's arrest in February 2023. Subsequently, the ED assumed responsibility for exploring potential money laundering aspects of the policy.
Following the CBI's identification of Sisodia and 14 others, including AAP's communications in-charge Nair, in its FIR, the ED informed a court in March about the alleged proceeds of crime exceeding Rs 292 crore and emphasised the need to establish the modus operandi behind these purported financial irregularities.