New Delhi: The Jagan Mohan Reddy-led YSRCP “deliberately” dismantled Andhra Pradesh’s automated and transparent liquor distribution system after coming to power in 2019, replacing it with a manual regime that sidelined established brands at the expense of select “favoured” ones willing to pay kickbacks, according to the Enforcement Directorate.
The agency made the allegations on Friday after announcing the attachment of movable and immovable assets worth Rs 441.63 crore belonging to three prime accused—Kessireddy Rajasekhara Reddy, Booneti Chanakya, and Donthireddy Vasudeva Reddy, and their family members and entities linked to them—in the Andhra Pradesh liquor policy case.
In May 2025, the ED registered a money laundering case under the PMLA and filed an Enforcement Case Information Report to probe financial crimes. These are the first attachments in the case by the agency.
The Y S Jagan Mohan Reddy-led Yuvajana Shramika Rythu Congress Party (YSRCP) stormed to power in the state following the assembly elections in 2019.
Kasireddy was the IT advisor to Jagan Reddy, while Booneti was a key associate of Kasireddy throughout the alleged scam period. Donthireddy Vasudeva Reddy was the managing director of the Andhra Pradesh State Beverages Corporation Limited during Jagan’s tenure as CM.
“The attached properties are in the form of bank balances, fixed deposits, land parcels and other immovable properties. ED initiated investigation on the complaint of the Principal Secretary to Government of Andhra Pradesh for loss to the Government exchequer to the tune of Rs. 4000 Crore,” the agency said in a statement.
The agency said in a statement that before 2019, the liquor trade in the state was regulated through a transparent, automated software system that ensured end-to-end digital tracking of procurement, supply, and sales, thereby leaving a verifiable electronic audit trail.
But after the 2019 Assembly elections, the newly formed state government “monopolised” retail liquor outlets through Government Retail Outlets (GROs) operated by the Andhra Pradesh State Beverages Corporation Limited (APSBCL), the statement said.
“As part of the criminal conspiracy, the automated system was deliberately disabled and replaced with a manual system, thereby vesting unfettered discretionary powers with APSBCL officials in the issuance of Orders for Supply (OFS),” the ED alleged in the statement.
Based on the investigation, the ED claimed that the manual OFS regime was misused to discriminate against established liquor brands, which were deliberately marginalised or removed from the market.
“Simultaneously, preferential and irregular allocations were extended to select ‘favoured’ brands on receipt of kickbacks. As part of the scheme, the syndicate promoted the introduction of ‘similar-sounding brands’ (SSBs) with artificially inflated basic prices,” said the statement.
This pricing manipulation enabled the distilleries manufacturing such brands to generate surplus margins, which were utilized to meet the illegal monetary demands of the cartel, it added.
Jagan Mohan Reddy has denied charges related to the scam. In an X post last year, he said the “alleged liquor scam is nothing but a manufactured narrative, created purely for media theatrics and to divert attention from real issues”.
“The entire case is built on statements extracted under pressure, threats, third-degree torture, and also through bribes and inducements,” he said.
I strongly condemn the illegal arrest of YSRCP Lok Sabha MP Sri P.V. Midhun Reddy. This is nothing but a political conspiracy designed to silence those who stand with the people. Midhun Reddy, who has been elected as a Member of Parliament for three consecutive terms, has been…
— YS Jagan Mohan Reddy (@ysjagan) July 20, 2025
‘Coercion’
The PMLA investigation further revealed that distilleries were coerced into paying kickbacks ranging from 15 percent to 20 percent of the basic price per case as a precondition for receiving OFS approvals, the ED said.
“Manufacturers who refused to comply were subjected to coercive measures, including withholding legitimate payments and rejection of supply orders. Communications relating to the demand and collection of kickbacks were carried out through encrypted VOIP calls and applications such as Signal, in order to conceal the identities and roles of key operatives, including Booneti Chanakya (alias Prakash), Muppidi Avinash alias Sumeeth, and Mohammed Saif,” the ED said.
Investigation allegedly revealed that Kessireddy Rajasekhara Reddy, along with other members of the said liquor syndicate, “orchestrated a multi-crore scam in liquor procurement and distribution system in the state.”
Further, the ED statement said, the investigation has also brought to light that the accused established and/or acquired control over several distilleries, which were utilised as Special Purpose Vehicles for the generation of proceeds of crime.
“Entities such as M/s Adan Distillery Pvt. Ltd., M/s Leela Distilleries Pvt. Ltd., and M/s U.V. Distilleries operated under the effective control of the syndicate and were granted disproportionately high business volumes by abusing political and administrative influence to acquire Proceeds of Crime in the form of financial gains arising out of the operations of such distilleries,” the statement said.
‘Manipulation’
Meanwhile, another identified source of illicit revenue generation was the manipulation of liquor transportation contracts awarded through tender floated by APSBCL, the ED statement alleged.
“The investigation revealed that a centralized transportation tender was awarded to M/s Sigma Supply Chain Solutions Pvt. Ltd. at rates significantly higher than the earlier depot-wise transportation costs. Though the contract was awarded in the name of SSCSPL, operational control was exercised by members of the liquor syndicate, primarily T. Eswar Kiran Kumar Reddy, Saif Ahmad, and others,” the ED said.
It has been established that a substantial part of the contract receipts were diverted to entities such as TEKKR, Arroyo and Ezyload, “which were used as conduits for laundering the Proceeds of Crime”, said the agency.
‘Fictitious entities’
The ED’s investigation also revealed that several distilleries engaged vendors and fictitious entities for the purported supply of raw materials and packaging items.
“These vendors facilitated the conversion of banking funds into unaccounted cash through inflated and fictitious invoicing for goods that were never actually supplied,” officials told the ED.
Further, the proceeds of crime were laundered into the real estate and used for the acquisition of personal assets. It has been established that “tainted” funds were routed through entities such as M/s Eshanvi Infra Projects Pvt. Ltd. (EIPPL), M/s ED Entertainment, M/s Uni Corporate Solutions Pvt. Ltd., M/s Tag Developers, and other related entities to acquire land parcels and undertake residential development projects.
“The investigation has also revealed the use of fabricated and back-dated agreements to falsely project such illicit funds as legitimate business receipts,” said the statement.
‘Shell companies’
While the investigation has progressed, what has emerged, as per ED, is that to conceal and project the criminal origin of the proceeds of crime as legitimate, the syndicate used a platform of bank accounts of a complex network of shell and front entities, including entities such as Olwick, Kripati, Nysna Multiventures, Arroyo, Ezyload, D-Cart, and others.
“These entities were used to layer funds through a complex web of transactions executed without any legitimate purpose, thereby concealing the illicit source and nature of proceeds, thereby projecting the Proceeds of Crime as untainted,” the ED said.
The ED said its investigation revealed that through manipulation of procurement and supply mechanisms, the syndicate generated illegal revenues estimated at approximately Rs 100 Crore per month, resulting in wrongful personal enrichment and corresponding loss to the state exchequer.
The investigation also revealed that physical cash kickbacks were collected and stored at multiple locations in Hyderabad, from which they were subsequently moved, distributed, or disposed of by the syndicate’s designated cash handlers, according to the agency.
So far, the ED’s investigation has claimed to have unearthed a money trail of Rs 1,048.45 crore in the form of alleged kickbacks, which distilleries were “compelled to pay” in the form of cash, gold, etc. as well as in the form of control and operation of some distilleries by the liquor syndicate, and also in the form of financial gains derived from transport of liquor.
“PMLA investigation has revealed that the proceeds of crime were used for the purchase of immovable properties and personal enrichment of the members of the liquor syndicate and their associates. A substantial portion of the Proceeds of Crime has been found to be concealed or dissipated by the accused persons. However, further investigation is under progress,” said the ED.
(Edited by Ajeet Tiwari)