Who are the so-called ‘South Group’, accused by ED in the Delhi Excise Policy case?

What exactly has the ED said about the South Group?

According to the ED’s prosecution complaint, AAP communication incharge Vijay Nair, acting on behalf of the party’s leaders, “received kickbacks to the tune of Rs 100 Crore from a group, for convenience, we may call it the South Group (as termed in the statements of various persons recorded during the investigation)”.

The ED has alleged that Magunta Sreenivasulu Reddy, the YSRCP Lok Sabha MP from Ongole in Andhra Pradesh, and Kalvakuntla Kavitha, Telangana MLC and daughter of state Chief Minister K Chandrashekar Rao, are prominent members of the South Group.

Others in the alleged group include the MP’s son Raghav Magunta, and P Sarath Chandra Reddy, the son of P V Ramprasad Reddy, founder of the Hyderabad-based Aurobindo Pharma.

The ED has claimed that these kickbacks were “paid in advance to the AAP leaders through Vijay Nair by the South Group as a part of agreement between the South Group and the AAP leaders”.

Why did the South Group pay these kickbacks, according to the ED?

According to the ED, the South Group “secured uninhibited access, undue favours, attained stakes in established wholesale businesses and multiple retail zones (over and above what was allowed in the policy)”.

The ED complaint states that to “recover the kickbacks given by the South Group, partners of the ‘south group’ were given 65 per cent stake in M/s Indo Spirits” in collusion with its owner Sameer Mahendru, who is also an accused in this case.

The agency has claimed that the formation of this partnership was “directed by Nair on the assurance of giving the wholesale business of Pernod Ricard to Indo Spirits”.

Pernod Ricard is a French wine and spirits company which owns popular brands such as Chivas, The Glenlivet, Jameson, Ballantine’s, Royal Stag, 100 Pipers, and Blenders Pride whiskies, Absolut vodka, and Jacob’s Creek wine. Mahendru’s Indospirit is a major liquor distribution company.

How did the South Group control Indospirit, according to ED?

The ED has alleged that the South Group controlled stake in Indospirit, through false representation, concealment, and proxies.

The agency has claimed that Mahendru had never met a partner who controlled a 32.5 per cent stake in his company, and that these partnerships were not genuine. According to the ED, the proxies “brought the capital into this business which can be traced back to the South group”.

Also, “the partners belonging to this group were allowed to withdraw from the profits of Indo Spirits. There is evidence to show that this withdrawal can be linked to the money that was paid to Vijay Nair. That, in order to create a device for continuous payment of kickbacks to Sh Vijay Nair, an unheard of margin of 12% was provided to the private wholesalers (LIS) contrary to the recommendations of the Expert Committee”, the ED complaint said.

What was the extent of losses to the government as a result of the South Group’s activities, according to the ED?

The ED has alleged that the government lost revenue to the tune of Rs 581crore, and this ‘loss to the Government exchequer actually got illegally diverted into ostentatious profits to the wholesalers including the accused M/s Indo Spirits, which was used to recoup the kickbacks paid in advance by the South group”.

What has the agency said about KCR’s daughter K Kavitha?

The ED complaint has relied on the statement of Mahendru to allege that he was approached by members of the South Group who expressed interest in his company, M/S Indospirit. Mahendru’s alleged partnership with the south cartel was cemented over several phone calls and meetings with Kavitha, and he eventually became “like family to her”, the ED has claimed.

Mahendru allegedly told the ED that when he was initially told by Nair that the South Group “was keen on investing in Delhi business, that this group had deep pockets, political connections and friends of Arvind Kejriwal”, he had resisted joining this partnership, because he was of the view that the South Group wanted to own stake in his company without making much investment.

The ED has alleged that Kavitha spoke to Mahendru in September 2021 on Facetime, “congratulated Sameer for Delhi business”, and was “happy that they have partnered up”.

According to the ED, in 2022, Mahendru met Kavitha at her house in Hyderabad, where she told him that he was “like family to her and doing business with Arun (Pillai) was like doing business with Kavitha and that they will take this relationship to a larger scale in multiple states and expand majorly”.

Arun Ramachandra Pillai is a Hyderabad-based businessman who too is alleged to be a member of the so-called South Group. Kavitha has denied all allegations in the past.

So what is the status of the investigation against the members of the South Group?

* The ED has arrested Raghav Magunta, son of the YSRCP MP Magunta Sreenivasulu Reddy. It has said that Raghav is the “key person in the conspiracy of cartelisation and kickbacks hatched along with various persons in the Delhi Excise policy 2021-22 scam”.

* Butchibabu Gorantla, Kavitha’s Hyderabad-based chartered accountant (CA), has been arrested by the CBI for his alleged role in formulating and implementing the Delhi Excise Policy.

* P Sarath Chandra Reddy was arrested by the ED on November 10, 2022.

* In September last year, the ED had searched the offices, premises and properties owned by Magunta Sreenivasulu Reddy in Nellore, New Delhi, and Chennai.