Arrested YSRCP MP’s son a part of ‘South group’ that paid ‘Rs 100 cr’ to AAP, influenced policy: ED

Raghava Reddy was part of group whose prominent member allegedly include Telangana CM's daughter K. Kavitha. He had key role in formulation of now retracted excise policy, says ED.

File photo of Raghava Reddy, who was arrested by ED in the alleged Delhi liquor scam | Twitter | @MaguntaRaghava

New Delhi/Hyderabad: The Enforcement Directorate (ED) on Friday evening arrested Raghava Reddy, the son of YSR Congress Party (YSRCP) MP Magunta Srinivasulu Reddy, in connection with the alleged money laundering in the Delhi excise policy case.

According to the ED, Raghava played a key role in formulation of the now retracted excise policy and was part of the “South group” that gave advance kickbacks of Rs 100 crore to leaders of the Aam Aadmi Party through media and communications in-charge Vijay Nair, to have a stake in Delhi’s liquor business and make profits.

The South group was allegedly controlled by businessman Sarath Reddy and had Bharat Rashtra Samithi (BRS) leader and daughter of Telangana CM, K Chandrashekhar Rao, K. Kavitha and Magunta Srinivasulu Reddy, as its members among others. 

This money — managed through “hawala channels” — was then used in the AAP’s poll campaign in Goa, the ED claimed.

 “This group was keen on investing in Delhi business. In fact, Vijay Nair had told Sameer Mahendru, owner of Indo Spirits, that this group had deep pockets, political connections and were friends with Kejriwal,” a source in the ED said.

 “The group had several meetings with Vijay Nair on Face Time and later they also met physically and the focus primarily was on understanding the Delhi liquor business and the opportunity to invest in the new policy,” the source said.

As a deal, the source said, out of the 32 retail zones in Delhi, the South group got control of 9.

Raghava, the son of four-time MP Magunta Srinivasulu Reddy, does not have any political career but is likely to contest from his father’s Ongole constituency in 2024.

In his statement, Amit Arora, a businessman arrested in the case, told the ED that he met Reddy for discussion of liquor trade two-three times at his residence in Delhi and his son Raghava was also present. He has also said that he had seen the statements of his employees Sunil and Hemant Ladia where they state that certain excess credit notes of Rs 4.35 crore were issued to entities of Sarath Reddy, ED sources said.

The case pertains to allegations against the AAP government that it granted undue financial favours to vendors taking liquor licences, causing losses of “over Rs 140 crore” to the exchequer, and receiving kickbacks in return for those favours, besides conniving with owners of several companies as part of a nexus.

On 22 July last year, Delhi Lt. Governor Vinai Kumar Saxena recommended a CBI probe into the AAP government’s Excise Policy 2021-22, alleging “deliberate and gross procedural lapses”, according to an assessment report prepared by Delhi chief secretary Naresh Kumar.

Alleged irregularities included modifications in the excise policy, extension of undue favours to licensees like waivers and reduction in the licence fee, and extension of L-1 licence (granted to business entities having wholesale distribution experience in liquor trade) without prior approval.  

Apart from Delhi Deputy CM Manish Sisodia and Nair, the 15 individuals named in the charge sheet include former deputy excise commissioner Anand Tiwari, former assistant excise commissioner Pankaj Bhatnagar and liquor barons who represent premium alcohol brands such as Glenlivet, Absolut and Jameson. 

‘Policy to generate illegal funds’

According to the ED, Delhi government’s new excise policy was framed by top AAP leaders to continuously “generate and channel illegal funds to themselves”. The policy, the ED said, was formed with “deliberate loopholes to facilitate illegal and criminal activities.”

The policy though on the face of it had promising and laudable objectives of stopping cartelisation and encouraging fair trade practices, but in reality it “promoted cartel formations through back door, awarded exorbitant wholesale (12 per cent) and huge retail (85 per cent) profit margins”, the agency said.

The 12 per cent profit margin to the wholesalers was devised to extract half of it as a kickback to the AAP leaders, the ED claimed.

In its charge sheet, a copy of which is with ThePrint, the ED said that Nair was the key person from the AAP who “orchestrated the conspiracy of kickbacks, undue favours and arm twisting”.

“Cash payments to the tune of Rs 70 lakh were made to volunteers’ part of survey teams. Moreover, advertisement-related work was directed to raise only part of the claims in the bill and receive the remaining in cash. These parts of cash payments were managed through hawala channels. Nair even directed firms to issue bogus invoices,” it said.

Stating that Nair had no role in the Delhi government, the ED said he “acted as a broker, middleman on behalf of AAP leaders for getting bribes, kickbacks from various stakeholders in Delhi liquor business in exchange of favourable policy changes, which was being drafted”.

The ED further alleged that Nair threatened stakeholders who were not complying with his demands and  accused him of arm-twisting wholesalers to surrender their L1 licences in connivance with businessman Dinesh Arora. Nair then selected wholesalers to manage profit margins, which the ED said was done to ensure that they were in complete control of the “kickbacks to be extracted”. 

Reddy’s association with liquor industry

The Reddy family has been in the liquor industry business for almost seven decades. It also runs Balaji Group of Industries with businesses, reportedly, in real estate, steel manufacturing among others. 

In September, the ED conducted raids on the YSRCP MP’s properties in Ongole and Nellore in connection with the Delhi liquor scam case. The ED suspected that Balaji Distilleries, for which the MP was once a promoter, could have benefitted from the Delhi excise policy. 

Reddy has denied any connection to the alleged liquor scam, adding that he, or his immediate family, has no business activity in Delhi.

“My son or I have never been involved in any kind of liquor business in Delhi. In 1952, my father started the liquor business and since then the Magunta family has been associated with the liquor business. After I entered politics, I have detached myself from businesses. However, my relatives are doing this business in Delhi, but I am not connected to it or aware about their developments,” Reddy said in September, claiming that the ED found no ‘incriminating’ documents after the searches. 

Although Reddy said that he distanced himself from the businesses, he confirmed that his son Raghava is looking after the businesses. Raghava is also listed as a director for at least half a dozen private limited companies, in the past.

Coming from a family of politicians, Reddy started off his political career with Congress in 1998 and then moved to the Telugu Desam Party (TDP) in 2014. Five years later, he jumped ship to YS Jagan-led YSRCP just before the polls and successfully contested from Ongole.  

“He is not really close to Jagan as he changed loyalties just before polls and moved to YSRCP. He is, however, said to be close to Y.V. Subba Reddy (Tirumala Tirupati Devasthanam Board chairman and former MP from Ongole) as they are from the same region. At this point, these searches appear to be purely business related, nothing to do with Jagan’s relationship with the BJP leadership or so,” a senior YSRCP leader said.

(Edited by Tony Rai)