The Indian division of Pernod Ricard has reported that its internal investigation has uncovered the involvement of specific employees in interactions with the government and key individuals associated with the discontinued excise policy in Delhi.
“The company had engaged an independent third party to carry out an internal investigation on the Delhi Excise policy issue which highlighted certain findings including involvement of certain employees in activities relating to formulation and implementation of Delhi Excise Policy 21-22 and engagement with government officials and other third parties/alleged key conspirators/specific distributors/retailers,” Pernod said in its latest annual filings with the Registrar of Companies. It added that these findings are not conclusive in nature, given the ongoing investigation and are subject to interpretations by the legal counsel.
The French alcoholic beverage company’s license in Delhi was not extended, as investigating authorities implicated the company in a suspected corruption and cartelization case associated with the excise policy. In a related development, the Central Bureau of Investigation arrested former Delhi deputy chief minister Manish Sisodia in February for his alleged involvement in the same excise-related case.
“We are currently assessing the conclusions of the third party. Furthermore, as the matter is sub-judice, we are unable to comment on the allegations made by the ED and on the findings resulting from the internal investigation. In line with its local and international standards, Pernod Ricard India has been very solicitous about its legal and ethical obligations, including fully co-operating with government agencies in the investigation of the Delhi Excise Matter, ” said a Pernod Ricard India spokesperson.
In November 2021, the Delhi government opted to withdraw from the liquor retailing sector, entrusting it to private companies. Nevertheless, in the preceding year, it returned to the previous policy. Investigative agencies have alleged that this policy facilitated the clandestine creation of cartels and allowed for substantial wholesale profit margins of 12% and retail margins as high as 185%.
The Enforcement Directorate (ED) has made allegations against Pernod Ricard, the owner of Blenders Pride and Royal Stag brands, asserting their involvement in retail cartelization, money laundering, false price declarations, and obtaining international approval for corporate guarantees to aid suppliers, thereby creating circumstances that would confer a strategic advantage in 20 out of the 32 proposed zones in Delhi.
“Based on legal counsel’s review of the complaint, the company’s exposure in terms of civil liability under PMLA could be equivalent to ‘5,637 million as quantified in the ED’s complaint, though the final outcome cannot be determined with any degree of certainty at this stage,” Pernod added.