Hyderabad: The Enforcement Directorate (ED), Hyderabad, on Friday, March 6, attached assets worth Rs 441.63 crore of Kessireddy Rajasekhara Reddy, his family members and associated entities in connection with the alleged Andhra Pradesh liquor scam.
The provisional attachment under the Prevention of Money Laundering Act (PMLA) also covers assets linked to Booneti Chanakya and his related entities, as well as relatives and entities associated with Donthireddy Vasudeva Reddy and other persons connected with the case.
The attached assets include bank balances, fixed deposits, land parcels and other immovable properties, according to a press release by the ED.
System gamed to enable kickbacks
The money laundering probe stems from a first information report (FIR) registered by the Andhra Pradesh Crime Investigation Department (CID) under sections 120B (criminal conspiracy), 409 (criminal breach of trust by public servants, bankers, merchants or agents) and 420 (cheating) of the Indian Penal Code (IPC) following a complaint by the state’s Principal Secretary, alleging a loss of around Rs 4,000 crore to the government exchequer.
According to the ED, the liquor trade in Andhra Pradesh was regulated through a transparent automated software system prior to 2019, which enabled end-to-end digital tracking of procurement, supply and sales and created a verifiable electronic audit trail.
However, after the 2019 Assembly elections, retail liquor outlets were brought under government control through Government Retail Outlets (GRO) operated by the Andhra Pradesh State Beverages Corporation Limited (APSBCL). The ED alleged that the automated system was deliberately disabled and replaced with a manual process, giving officials wide discretionary powers in issuing orders for supply (OFS).
Investigators said the manual OFS system was used to sideline established liquor brands while extending preferential allocations to select “favoured” brands in return for kickbacks. The agency also alleged that the syndicate promoted “similar-sounding brands” with inflated base prices, enabling distilleries to generate surplus margins that were used to meet illegal monetary demands.
The ED claimed distilleries were forced to pay kickbacks ranging from 15 to 20 per cent of the basic price per case as a precondition for receiving supply approvals. Manufacturers who refused were allegedly subjected to pressure.
Encrypted calls, shell firms and a Rs 3,500 crore trail
Communications relating to the alleged kickback network were carried out through encrypted VOIP calls and messaging applications such as Signal, the agency said, naming Booneti Chanakya alias Prakash, Muppidi Avinash alias Sumeeth and Mohammed Saif among key operatives.
According to the agency, Kessireddy Rajasekhara Reddy, along with other members of the alleged liquor syndicate, manipulated the procurement and distribution process of APSBCL, leading to an estimated loss of Rs 3,500 crore to the state exchequer. The agency alleged that kickbacks totalling around Rs 3,500 crore were collected and distributed among members of the syndicate.
The probe also found that several distilleries were either established or brought under the effective control of the accused and used as special-purpose vehicles to generate proceeds of crime. Entities such as Adan Distillery Pvt Ltd, Leela Distilleries Pvt Ltd and UV Distilleries were allegedly granted disproportionately high business volumes through misuse of political and administrative influence.
The ED further alleged irregularities in liquor transportation contracts floated by APSBCL. A centralised transportation tender was awarded to Sigma Supply Chain Solutions Pvt Ltd at rates significantly higher than the earlier depot-wise transportation costs. Though the contract was issued in the company’s name, operational control was allegedly exercised by members of the syndicate, including Tukekula Eswar Kiran Kumar Reddy and Saif Ahmad.
The probe also revealed that several distilleries engaged vendors and fictitious firms for the supply of raw materials and packaging items. These entities allegedly raised inflated or fake invoices for goods that were never supplied, allowing funds from banking channels to be converted into unaccounted cash.
Illicit funds routed into real estate
According to the agency, the illegal proceeds were subsequently routed into the real estate sector and used for the acquisition of personal assets. Funds were allegedly channelled through entities such as Eshanvi Infra Projects Pvt Ltd, ED Entertainment, Uni Corporate Solutions Pvt Ltd and Tag Developers to acquire land parcels and undertake residential development projects.
The ED said fabricated and back-dated agreements were also used to portray such illicit funds as legitimate business income. Further investigation into the case is underway, it said.
