The Enforcement Directorate has claimed that Ms Kavitha was part of a lobby called the 'South Group', which played a key role in the alleged Delhi liquor policy scam.
The other members of the group, according to the agency, were Hyderabad businessman Sarath Reddy, YSR Congress Party MP Magunta Sreenivasulu Reddy and his son Raghav Magunta Reddy. Sarath Reddy and Raghav Reddy have turned approvers in the case.
The agency has said that the group was represented in their dealings by businessmen Arun Pillai and Abhishek Boinpally, and a chartered accountant, Buchi Babu.
According to the ED, the Delhi liquor policy of 2021-22 provided an exceptionally high profit margin of 12% for wholesalers and nearly 185% for retailers.
Of the 12%, six was to be recovered from wholesalers as kickbacks for AAP leaders and the South Group allegedly gave ₹ 100 crore in advance to another accused, Vijay Nair, who was linked to the ruling party in Delhi.
In exchange, Nair allegedly promised the South Group a stake in the Delhi liquor business. Officials said the group was allowed to hold more retail licences than were permitted under the policy, and was also given other undue benefits.
One of the entities linked to the group was Indospirit, whose MD was Sameer Mahendru. Arun Pillai and Prem Rahul Manduri, another person linked to the group, had a 65% stake in the company, and Kavitha and the Reddys were partners via proxies, officials said.
They claimed Vijay Nair had asked Mahendru to give a stake in the company to Pillai and Manduri. In exchange, Indospirit was promised the wholesale business of Pernod Ricard, one of the largest liquor manufacturers, which has brands like Chivas Regal, Absolut and Jameson.
Nair, officials claimed, was working on behalf of then Delhi deputy chief minister Manish Sisodia - who is now in jail in the case - and Pillai has allegedly admitted to being Ms Kavitha's representative in Indospirit.
During questioning, Buchi Babu allegedly admitted that the total amount paid through hawala channels in this deal was around ₹ 100 crore.
The officials alleged Kavitha used at least 10 phones between 2021 and 2022 to avoid leaving a digital trail. The ED has claimed she was an active participant in the scam and helped Pillai, Babu and others figure out how to conduct illegal business dealings.
Sections under which Kavitha was arrested
The ED arrested BRS MLC K. Kavitha under several provisions of the Prevention of Money-Laundering Act, 2002
Section 3
Offence of money-laundering: Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the [proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering.
Section 4
Punishment for money-laundering: Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine: Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words which may extend to seven years, the words which may extend to ten years had been substituted.
Part A, Paragraph 2: Offences Under The Narcotic Drugs And Psychotropic Substances Act, 1985 (61 of 1985) that includes ‘contravention in relation to psychotropic susbtances’ (Alcohol is considered a psychotropic substance).
