What is the Delhi liquor case and what are the ED’s allegations against AAP leaders?

What are the allegations in the “Delhi excise policy scam”?

The allegations arose out of a report submitted by Delhi Chief Secretary Naresh Kumar to Lieutenant Governor (LG) Vinai Kumar Saxena in July 2022, pointing to alleged procedural lapses in the formulation of the policy.

The report said “arbitrary and unilateral decisions” taken by Sisodia in his capacity as Excise Minister had resulted in “financial losses to the exchequer” estimated at more than Rs 580 crore. It alleged that “kickbacks…received by the AAP Delhi government and AAP leaders” from owners and operators of alcohol businesses for preferential treatment such as discounts and extensions in licence fee, waiver on penalties and relief due to disruptions caused by the Covid-19 pandemic, etc. were used to “influence” the Assembly elections held in Punjab and Goa in early 2022.

The report was referred to the CBI and led to Sisodia’s arrest.

How did the ED come into the picture?

After the CBI named Sisodia and 14 other accused in its FIR, including AAP communications in-charge Vijay Nair, the ED told a court in March that the alleged proceeds of crime amounted to more than Rs 292 crore, and that it was necessary to establish the modus operandi.

The ED alleged that the “scam” was to give the wholesale liquor business to private entities and fix a 12% margin, for a 6% kickback. In its first prosecution complaint in November 2021, the ED said the policy was “formulated with deliberate loopholes” that “promoted cartel formations through the back door” to benefit AAP leaders.

The ED also alleged that AAP leaders, with Nair as a middleman, received kickbacks to the tune of Rs 100 crore from a group of individuals identified as the “South Group”, who secured uninhibited access to various wholesale businesses and retail zones in violation of rules.

How was Delhi’s new excise policy different from the existing policy?

The policy envisaged the exit of the state from the liquor business to allow it to reach its full potential. Delhi was divided into 32 zones, each of which had 27 liquor vends — that is two-three private liquor shops in each of the 272 municipal wards.

The stated goal of the policy was to shut down black marketing and the liquor mafia, increase revenue, improve the consumer experience, and ensure equitable distribution of liquor vends across the capital. The licensees were allowed to offer discounts and set their own prices instead of selling at the MRPs fixed by the government.

So, what went wrong?

On July 8, 2022, Chief Secretary Kumar sent a five-page report to LG Saxena and Chief Minister Arvind Kejriwal flagging “deviations” from laid-down procedures in the formulation of the Delhi Excise Policy 2021-22. Based on the Chief Secretary’s note, the LG asked the Vigilance Department for a detailed report.

The Vigilance report said the “hefty discounts” being offered by liquor retailers were causing “severe market distortions”, and that licensees were issuing advertisements and promoting liquor and their shops through various means.

The report flagged an apparent reversal of policy by Sisodia. It recalled that in December 2015, he had overruled, “without assigning any reason”, an Excise Department proposal to cut the number of dry days from 23 to three, the same as in neighbouring UP and Haryana, to deter smuggling of liquor into Delhi; however, in January 2021, he had approved the same proposal “without even taking approval of the Council of Ministers”.

It said that extending the licence period without an increase in fee prima facie led to “undue benefit” to licensees without “any justification”.

The report also flagged the “blanket relaxation” given for default in the payment of licence fees, which was allegedly approved by Sisodia without the concurrence of the Council of Ministers and the LG. It said licence fees worth Rs 144.36 crore were waived in January 2022 “on pretext of COVID restrictions as relief to the Liquor Cartel”.

What have the ED chargesheets said so far?

The ED has alleged that Rs 100 crore “kickbacks” were “used” in the AAP’s 2022 Goa Assembly election campaign.

One of the ED chargesheets says “the conspiracy…to give wholesale business to private entities and fix 12% margin (to get 6% kickback out from the same) is clear from the statement of [former secretary to Sisodia] C Aravind…”.

In another chargesheet, the ED alleged that accused-turned-approver Dinesh Arora acted as a “conduit for kickbacks” between the “South Group” and AAP. Arora, a Delhi-based restaurateur, was among the 15 people named in the CBI FIR in 2022. He turned approver in November last year, but was arrested by the ED in July this year. On Tuesday, a Delhi court allowed him to turn approver in the ED case as well.

In its prosecution complaint, the ED said that Arora came in touch with Sisodia through Sanjay Singh at a party in a restaurant. The ED claimed that Arora told investigators that he had spoken to many restaurant owners “on request of Mr [Sanjay] Singh” and “arranged cheques amounting to Rs 82 lakh for collection of party funds for the upcoming elections”.

In its supplementary prosecution complaint, the ED has alleged that Chief Minister Kejriwal himself spoke to one of the main accused, Sameer Mahendru, over a video call and asked him to continue working with co-accused Vijay Nair whom he referred to as “his boy”.

AAP Rajya Sabha MP Raghav Chadha’s name also figures in a supplementary chargesheet: he is alleged to have been present in a meeting at Kejriwal’s home along with some officials from Punjab.