ED searches reveal large-scale fraud involving distillery companies 

Enforcement Directorate uncovers financial fraud involving distilleries and bottling companies, siphoning off over ₹1,000 crore in unaccounted-for cash.

The Enforcement Directorate has found serious financial fraud involving distillery companies and bottling entities through generation of unaccounted-for cash and illicit payments.

In a press release, the Central agency said distillery companies SNJ, Kals, Accord, SAIFL and Shiva, and bottling firms Devi, Crystal and GLR Holding, were part of a well-orchestrated scheme of generating unaccounted-for cash.

The investigation had revealed that the distilleries systematically inflated expenses and fabricated bogus purchases, particularly through bottle-making companies, to siphon off over ₹1,000 crore in unaccounted-for cash. These funds were then used towards kickbacks to secure more supply orders from Tamil Nadu State Marketing Corporation (Tasmac).

The ED said the bottling companies played a critical role in the fraud by inflating sales figures, allowing distilleries to route excess payments, which were later withdrawn in cash and returned after deducting commissions. This collusion between distilleries and bottling companies was done through manipulation of financial records, concealed cash flows, and systematic evasion. The findings pointed to a network where unaccounted-for cash was generated through inflated and bogus expenses, and subsequently utilised for purposes leading to huge profits.

The ED said the role of employees/associates of Tasmac, distilleries and bottle-making companies was being examined. Evidence of manipulation in Tasmac’s transport tender allocations was found. A glaring issue was the mismatch between the KYC details of the applicant and the Demand Draft (DD), suggesting that the successful bidder did not even obtain the requisite DD before the application deadline. Additionally, tenders were awarded despite having only a single applicant in the final bid. Tasmac paid over ₹100 crore annually to transporters.

Evidence of manipulation of tender conditions was found in the allocation of bar licence tenders by Tasmac. One such issue was that applicants without GST/PAN number or proper KYC documentation were allocated the final tenders. There was proof of direct communication between distillery companies and higher officials in Tasmac, exposing efforts to secure increased indent orders and undue favours.

The release said the findings established various offences under the Prevention of Corruption Act, 1988, and generated Proceeds of Crime (POC) as defined under the provisions of the Prevention of Money Laundering Act, 2002.