Exclusive | TN liquor scam: Who is final recipient of Rs 1,000-cr Tasmac kickback money?

The Enforcement Directorate (ED) has reportedly discovered evidence of a large-scale black money operation involving private distilleries in Tamil Nadu, with illicit financial activities totalling over Rs 1,000 crore.

This investigation was initiated following an FIR lodged by the Directorate of Vigilance and Anti-Corruption (DVAC) against officials of the Tamil Nadu State Marketing Corp Ltd (Tasmac) for the alleged corruption. This prompted the ED to file a new FIR under the Prevention of Money Laundering Act (PMLA).

Also read: Exclusive: ED spots black money link between Tamil Nadu distilleries and Tasmac

ED investigation

The inquiry focuses on private distilleries, intermediaries and multiple individuals including those purportedly associated with Tamil Nadu Electricity, Prohibition and Excise Minister V Senthil Balaji.

In the wake of the FIR, ED officials executed extensive searches at the Tasmac headquarters, storage facilities, private distilleries and the residences of individuals believed to be connected to Senthil Balaji.

An ED officer told The Federal: “For many years, private distilleries have served as a breeding ground for black money generation. We have uncovered compelling evidence indicating that over Rs 1,000 crore has been generated from these distilleries and associated sites, resulting in a considerable loss to the state treasury.”

The officer characterised the discoveries as merely “the tip of the iceberg,” indicating that suspects had taken measures to destroy evidence or replace their mobile devices to avoid detection. “We are actively working to recover tampered evidence and retrieve deleted data from the devices we have confiscated,” he said.

Modus operandi

The official explained how distilleries inflated invoices to misappropriate funds. “Numerous distilleries issued fraudulent invoices, overcharging for supplies. For example, a transaction valued at Rs 1 lakh was recorded as Rs 1.5 lakh, with the additional Rs 50,000 disbursed in cash to intermediaries. These middlemen likely funnelled the money to Tasmac officials and higher authorities,” he said.

The ED is tracing the flow of cash to identify its final recipients. The officer suspects that only a minor portion reaches Tasmac officials, with the majority possibly directed to powerful political figures.

Among the distilleries under investigation, SNJ Distillers Pvt Ltd, Kals Distilleries Pvt Ltd, MGM Distilleries, SHIVA Distilleries Pvt Ltd and Accord Breweries and Distilleries Ltd are significant suppliers to Tasmac, ranked by their share of liquor supply.

These five companies are pivotal to the ED’s inquiry into the extent of the scam. “We have seized unaccounted cash tune to Rs 50 lakh from MGM Distilleries,” the officer said.

Challenges in probe

The officer refrained from providing details about the underlying offence — the DVAC’s initial corruption case — citing concerns regarding potential interference.

Also read: Tamil Nadu: ED raids in fresh case against Senthil Balaji, others linked to TASMAC

“In Tamil Nadu, individuals involved in corruption often possess political clout that enables them to suppress local cases and hinder the investigation,” he said, alluding to efforts to obstruct the inquiry.

While the ED has not yet uncovered direct evidence linking Balaji to the scam, it is investigating how the liquor operation functioned with the alleged complicity of Tasmac officials. Senthil Balaji oversees Tasmac, making his associates a key focus of the investigation.

Political repercussions

The investigation has ignited a significant political controversy. The ruling DMK, along with other parties, has accused the BJP-led Union government of exploiting agencies such as the ED, the CBI and the Income Tax Department as tools to target states governed by Opposition parties.

In a related development, K Thiruselvam, general secretary of the Tasmac Employees State Federation, has alleged that officials, as well as politicians, have transformed Tasmac into a “black money-generating entity”.

He raised questions regarding the agency’s financial status. “Despite generating substantial revenue, Tasmac is reported to be operating at a loss on paper. We suspect that 40 per cent of distillery output is being diverted to the black market — distributed through bars associated with Tasmac, small liquor shops and FL2-licensed establishments, all in contravention of government regulations.”

Corruption in liquor industry?

The findings of the ED indicate a deeply rooted system of corruption within Tamil Nadu’s liquor industry, implicating private distilleries, Tasmac officials and potentially influential political figures.

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As the agency endeavours to recover destroyed evidence and trace the flow of illicit funds, the investigation poses a risk of unveiling a network that has drained the state’s finances while bolstering an underground economy.

Currently, with a lack of direct evidence against Senthil Balaji, the ED’s focus is on Tasmac's operations and the obscure intermediaries involved in this scandal.

The Tamil Nadu liquor scam is distinct from the so-called "scams" in Delhi and Chhattisgarh due to its emphasis on manipulating a state monopoly via overbilling and illicit market diversion, rather than pursuing policy changes as seen in Delhi or establishing a parallel sales network like in Chhattisgarh.