The Enforcement Directorate’s (ED) Hyderabad Zonal Office conducted extensive search operations this Thursday, targeting twenty locations across eight states including Hyderabad, Bengaluru, Chennai, Thanjavur, Surat, Raipur, Delhi NCR, and various parts of Andhra Pradesh. These actions are part of an ongoing probe into the intricate Andhra Pradesh liquor scam.
Operating under the Prevention of Money Laundering Act (PMLA), 2002, the raids specifically focused on individuals and entities believed to have facilitated illicit kickbacks through a series of fraudulent and overpriced transactions.
The comprehensive searches yielded significant incriminating evidence. Investigators seized counterfeit invoices, transport challans detailing non-transport vehicles, and parallel invoices that artificially inflated prices. Crucially, digital chats were discovered, allegedly implicating key accused individuals who are currently believed to be hiding in Dubai.
Further evidence included ledgers revealing the transfer of several crores in criminal proceeds overseas, alongside the seizure of ₹38 lakh in unexplained cash.
The ED’s investigation commenced following an FIR lodged by the Andhra Pradesh Crime Investigation Department (CID). The CID’s initial assessment estimated the state exchequer’s losses from this scam to be approximately ₹4,000 crore.
In response to the severity of the allegations, the State government formed a Special Investigation Team (SIT) on February 5, 2025, specifically tasked with delving deeper into the case.
The FIR outlined a scheme operating between October 2019 and March 2024, under a ‘new liquor policy.’ It alleged that certain individuals deliberately suppressed popular liquor brands like McDowell’s, Royal Stag, and Imperial Blue, specifically those that declined to pay kickbacks. Instead, they promoted obscure or potentially fake brands in exchange for substantial payments from distilleries and suppliers. A critical step in this manipulation was the shift from automated to manual approval for “Order for Supply” (OFS), creating a loophole for illicit control.
The SIT’s chargesheets, including supplementary filings, further detailed the alleged illicit activities. They claimed the accused swapped automated processes for manual approvals to tamper with supply volumes, granting undue preference to specific distilleries. Suppliers were reportedly strong-armed into paying 15% to 20% of their invoice value as kickbacks, and “shell distilleries” were established as conduits for channeling these illegal funds.
Additionally, the chargesheets revealed allegations of strategically placed key officials whose roles were to manipulate eligibility criteria, silence uncooperative suppliers, and rubber-stamp brand approvals that solely benefited their preferred companies.
These kickbacks, the investigation suggests, were laundered through manipulated procurement processes, fictitious vendor payments, and shell companies. The illicit proceeds were allegedly diverted for election funding, personal enrichment, and international transfers.
The ED’s ongoing probe uncovered that specific accused individuals intentionally delayed payments to legitimate distilleries and actively discouraged orders for popular brands. In exchange for “Order for Supply” (OFS) approvals, they demanded illegal payments. By meticulously following the money trail, officials traced payments from the Andhra Pradesh State Beverages Corporation Limited (APSBCL) to suppliers, which were then transferred to various entities under the guise of legitimate goods or services. A significant number of these transactions were identified as fraudulent, with the recipients being either shell companies, non-existent firms, or individuals unrelated to the purported services.
Furthermore, the investigation revealed instances where inflated transactions were funneled through seemingly legitimate businesses. Funds were also diverted to jewelers to purchase gold and obtain cash, which were then delivered as kickbacks.
The ED has confirmed that its investigation into this extensive scam is still progressing, with more details expected to emerge.