K Kavitha, a prominent leader of the Bharat Rashtra Samithi (BRS) [formerly known as Telangana Rashtra Samithi (TRS)] and the daughter of Telangana Chief Minister K Chandrasekhar Rao, has been summoned by the Enforcement Directorate (ED) for questioning in connection with the now-defunct Delhi excise policy and allegations of kickbacks paid to Aam Aadmi Party (AAP) leaders.

The summons requires her presence on Friday, marking the latest development in an ongoing investigation.

This is not the first time that Kavitha has faced ED scrutiny in this case. She was previously questioned by the agency in March in connection with these allegations. The federal anti-money laundering probe agency is attempting to uncover her role in influencing the Delhi excise policy and the alleged bribery claims.

According to officials familiar with the matter, the ED has alleged that Kavitha had communication with Vijay Nair, AAP's communication in-charge, who had reportedly met with liquor businessmen and politicians during the policy's formulation and implementation. The agency is keen on understanding Kavitha's involvement in these activities.

Furthermore, Kavitha is expected to be questioned about her association with Sameer Mahendru's Indospirits Group, particularly in controlling multiple retail zones in Delhi. The investigation also revolves around the advance payment of kickbacks amounting to Rs. 100 crore to AAP leaders, allegedly orchestrated by a South group in which Kavitha played a role.

During a previous interrogation session, Kavitha was confronted with statements from Butchibabu Gorantla, her former chartered accountant, and Arun Ramchandra Pillai, who represented her interests during various meetings with Nair and others. Both Gorantla and Pillai were arrested by the Central Bureau of Investigation (CBI) in February and March, respectively.

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Manish Sisodia, former Delhi deputy chief minister, who has been implicated as a central figure in the formulation of the now-discarded 2021-22 excise policy, was also arrested in February.

Butchibabu's statement, recorded before ED officials on February 23, revealed that there was a "political understanding" between K Kavitha and the Chief Minister of Delhi, Arvind Kejriwal, and former Deputy CM Manish Sisodia. This understanding purportedly involved meetings with Vijay Nair and discussions about policy-related favours in exchange for funds for AAP.

The ED has alleged that part of the Rs. 100 crore kickbacks generated in the Delhi excise policy was directed towards the AAP campaign in the 2022 Goa assembly election. The agency has estimated the loss resulting from irregularities in the excise policy to be Rs. 2,873 crore.

The group involved in these alleged activities, referred to as the South Group, includes Yuvajana Sramika Rythu Congress Party (YSRCP) MP Magunta Srinivasulu Reddy, his son Raghav Magunta, Sarath Reddy (promoter of Aurobindo Group), K Kavitha, and Delhi-based businessman Sameer Mahendru.

Kavitha has vehemently denied the allegations against her, while Kejriwal, Delhi's Chief Minister, has dismissed the charges as "fake."

The 2021-22 Delhi excise policy aimed to revitalise the city's liquor business by introducing changes such as a license fee for traders and improved customer experiences. However, it was prematurely scrapped, leading to allegations of irregularities and a subsequent investigation. The policy was replaced by the 2020-21 regime, amid claims that last-minute changes by Delhi's lieutenant governor had resulted in lower-than-expected revenues, a contention challenged by the AAP.

Background

Delhi Liquor Excise Policy

The Excise policy, implemented on November 17, 2021, was crafted based on recommendations from an expert committee. Its primary objectives were to boost government revenues and dismantle the influence of the liquor mafia, curbing black market activities. This policy introduced a significant shift, as it initiated open bidding for 849 liquor vends, which were subsequently awarded to private companies. To ensure fairness, the city was divided into 32 zones, each granted a maximum of 27 vends, and the bidding process took place zone by zone.

With the implementation of this new excise policy, the city government's involvement in the liquor business ceased entirely. The government relinquished control over liquor sales in the capital. Despite the government's assertion that the policy aimed to ensure equitable distribution of liquor vends across the city, it faced criticism from various social, educational, and religious groups. The timing of its introduction, amid the challenges posed by the second wave of the Covid pandemic, exacerbated the situation for the Delhi government. Consequently, the policy was rolled back in July 2022, and the previous liquor policy was reinstated.

The controversy

The controversy surrounding the liquor policy began when allegations emerged, suggesting that the AAP government had granted unwarranted financial benefits to liquor licensees long after the tenders had been awarded. These actions were alleged to have resulted in substantial losses to the government's treasury. The Central Bureau of Investigation (CBI) initiated an inquiry into these allegations, focusing on potential advantages provided to private retailers.

The CBI has gone further, asserting that corruption in this matter implicates high-ranking officials within the Kejriwal-led government. They have alleged that substantial kickbacks amounting to crores were exchanged for favourable treatment under the policy, with these funds purportedly finding their way into the AAP's election campaign in Goa the previous year.

Adding to the controversy, a report dated July 8 from the Chief Secretary of Delhi last year indicated apparent violations of various regulations, including the GNCTD Act 1991, Transaction of Business Rules (ToBR) 1993, Delhi Excise Act 2009, and Delhi Excise Rules 2010.

In response to this report, Delhi Lieutenant Governor VK Saxena took decisive action, ordering an inquiry into the Delhi Excise Policy 2021-22. His recommendations, made on July 22, 2022, included urging the CBI to investigate potential breaches of rules and misconduct during the implementation of the excise policy.

Manish Sisodia’s arrest

The report made damning allegations, asserting that Manish Sisodia, the Minister In-charge of the Excise Department, not only took but also executed significant decisions and actions. These actions were deemed to be in clear violation of statutory provisions and the officially notified Excise Policy, which carried substantial financial implications. The report contended that these decisions were motivated by the sole objective of benefiting private liquor barons, in exchange for financial gains that reached individuals at the highest levels of government, culminating with Minister Manish Sisodia himself.

In August, the Central Bureau of Investigation (CBI) filed an FIR in a special court, citing allegations that crores of rupees had been purportedly disbursed to close associates of Sisodia by Sameer Mahendru, the proprietor of Indospirits. Mahendru had been intricately involved in irregularities during the formulation and implementation of the excise policy.

The arrest of former Deputy Chief Minister Manish Sisodia represents one of the most significant developments in this ongoing matter. Sisodia was taken into custody by the CBI on February 26, as part of its investigation into alleged irregularities related to the framing and implementation of the Excise Policy of the Government of the National Capital Territory of Delhi. Subsequently, in the following month, Sisodia was arrested once again, this time by the Enforcement Directorate, which was probing allegations of money laundering in the same case.