Excise probe: ED takes custody of AAP’s Vijay Nair

ED had sought 14 days remand for both the accused, saying that they had to be confronted with voluminous data. The agency’s counsel said that while Nair’s replies, during his interrogation, were evasive, Boinpally was allegedly involved in “cartelisation” for the “south lobby”

The Enforcement Directorate (ED) on Monday arrested Vijay Nair, a businessman associated with the Aam Aadmi Party (AAP), and Abhishek Boinpally, a consultant who allegedly worked for the “south lobby”, in connection with its money laundering probe in the Delhi Excise Policy 2021-22.

Vijay Nair. (PTI)

Special judge MK Nagpal sent both the men to five days’ police custody, shortly after he granted them bail in the Central Bureau of Investigation (CBI) case which involves a probe into alleged irregularities in the excise policy.

The federal agency took them into custody under Prevention of Money Laundering Act (PMLA) from Tihar prison, where they were lodged in connection with the CBI case.

ED had sought 14 days remand for both the accused, saying that they had to be confronted with voluminous data. The agency’s counsel said that while Nair’s replies, during his interrogation, were evasive, Boinpally was allegedly involved in “cartelisation” for the “south lobby”--a group of liquor businessmen based in the south of India who received liquor licences in Delhi.

Earlier in the day, Nair moved the Delhi high court, accusing the CBI of leaking sensitive information related to the alleged excise policy scam. His counsel told justice Yashwant Varma that the leaks are in violation of his rights.

The court asked him to place on record all the press communications and public announcements issued by them in relation to ongoing probe in the alleged scam case and posted the matter for November 21.

Justice Varma said that the court will consider the public communications issued by both the probe agencies and then consider if the media reported on the basis of the said communications or “out of their figment of imagination.”

The ED’s probe, apart from the money trail, is also focusing on why the GoM (group of ministers)--comprising Delhi’s deputy chief minister Manish Sisodia (named as accused in the case), former urban development minister Satyendar Jain (currently lodged in Tihar and already questioned by ED in excise policy) and transport minister Kailash Gehlot--ignored the recommendations of an expert committee formed by Delhi government under the excise commissioner to look at a new policy.

While taking remand of P Sarath Chandra Reddy, wholetime director of Telangana based Aurobindo Pharma Ltd, and Benoy Babu, regional head of the French wine company Pernod Ricard, the ED informed a Delhi court last Thursday that the GoM “went against the suggestions of the expert committee and public opinion and formulated new policy to perpetuate the fraud”.

One of the key recommendations of the expert committee – which submitted its report on October 13, 2020 -- was to “separate the manufacturer from wholesale operations and hand it to one government entity which will handle the entire wholesale operation in Delhi” to avoid cartelisation.

The expert committee report was placed in public domain on December 31, 2020 and comments from stakeholders and the general public were sought till January 21, 2021. As many as 14,671 comments were received.

According to the ED remand note from last Thursday, “The excise policy was claimed to be based on the public opinion and also on the report of the expert committee. GoM went against the suggestions of the expert committee and public opinion and formulated a new policy to perpetuate the fraud”.

There was also a gap of three-and-a-half months in announcing the policy (on July 5, 2021) from the date of GoM submitting its report (on March 22, 2021), ED said, adding that this shows “high-handedness and vested interests of certain politicians and that the whole charade of seeking public opinion at the first instance was a façade”.

“That, the expert committee had recommended to give wholesale operations to a single government entity and the savings to the manufacturers was proposed to be taxed as additional excise duty for revenue augmentation. This was proposed with the objective of eliminating cartelization between wholesaler and retailer and keeping government control on the highly sensitive liquor trade which is highly taxed and is prone to duty evasion. However, the policy formulated on the basis of GoM’s recommendations allowed private entities in the wholesale operations which resulted in shifting of profit from government to private entities. This model of route to the market gave space for cartel formation. Moreover, the government lost the control and supervision over wholesale business,” ED added.

The ED has pegged a loss of ₹2,631 crore to the excise department.

A second officer cited above said that questioning of Vijay Nair, former CEO of Only Much Louder - an entertainment and event management company, and Hyderabad-based businessman Abhishek Boinpally (whose partner Arun Pillai has been named as an accused in the first information report) is essential to understand all the aspects related to “cartelisation”.

It is alleged that Nair was actively involved in framing and implementation of the excise policy.

The Delhi government’s 2021-22 excise policy aimed to revitalise the city’s flagging liquor business. It aimed to replace a sales-volume based regime with a license fee one for traders, and promised swankier stores, free of the infamous metal grilles, ultimately giving customers a better buying experience. The policy also introduced discounts and offers on the purchase of liquor, a first for Delhi.

The plan, however, came to an abrupt end, with Delhi’s lieutenant governor Vinai Kumar Saxena recommending a CBI probe into alleged irregularities in the regime. This ultimately resulted in the policy being scrapped prematurely and being replaced by the 2020-21 regime, with the Aam Aadmi Party (AAP) alleging that Saxena’s predecessor sabotaged the move with a few last-minute changes that resulted in lower-than-expected revenues.

In August, CBI in its FIR listed Delhi deputy CM Manish Sisodia as an accused in the case. So far, five persons have been named in the case. Sisodia and the Aam Aadmi Party have dismissed the probe as a politically motivated witch-hunt.

Meanwhile, a Delhi court on Monday reserved its order on a plea by businessman Dinesh Arora, the alleged aide of deputy chief minister Manish Sisodia, seeking to turn an approver in the excise policy scam.

Special judge MK Nagpal said that he would pass order on Arora’s plea, seeking pardon, on November 16 following which his disclosure statement will be recorded, his lawyer Rajesh Thakur said.

The proceedings in the case were conducted in-camera as the case details were sensitive in nature.

During the arguments, CBI endorsed Arora’s plea and said that the accused has joined the investigation. In its reply, the CBI has told the court that Arora has disclosed the true facts of the case, which is “self-culpatory”.

The agency said that Arora has disclosed the conspiracy of the transaction of money between the accused for deriving undue benefit from the provisions of the excise policy. The CBI also said that he disclosed the hawala channels which are vital for unearthing the conspiracy.