ED arrests BRS leader K Kavitha in Delhi excise policy case

New Delhi: The Enforcement Directorate (ED) on Friday arrested K Kavitha, Bharat Rashtra Samithi (BRS) leader and daughter of former Telangana chief minister K Chandrasekhar Rao, in connection with its investigation into money laundering charges linked to the now-scrapped Delhi excise policy 2021-22 case.

She is the third high-profile politician to be arrested in the case after Aam Aadmi Party (AAP) leaders Manish Sisodia and Sanjay Singh, both currently lodged in Tihar jail.

The development comes at a time when the ED is also vehemently pushing for Delhi chief minister Arvind Kejriwal’s questioning in the case. The AAP national convener has so far avoided ED’s eight summons and is likely to appear before the court on Saturday, where the agency has filed two complaints against him for ignoring its summons.

The dramatic arrest was made after an agency team led by assistant director Jogender searched her place and questioned her.

“K Kavitha has been arrested under the Prevention of Money Laundering Act (PMLA) as there is substantial evidence of her involvement in the case. She is being brought to Delhi and will be produced before the court,” said an ED officer who didn’t want to be named.

However, the officer said that Kavitha’s brother KT Rama Rao, was obstructing the ED team. “We are taking Telangana police’s help to resolve the situation,” he said. Rama Rao was seen telling the ED officials that their warrant was illegal. “You have given an undertaking in the Supreme Court, and now you are violating it. You are in serious trouble,” Rama Rao told an ED officer.

A member of the legislative council or MLC from Nizamabad, Kavitha was arrested at 5.20pm after a round of questioning. “K Kavitha is found guilty of the offence of money laundering defined under section 3 of the PMLA and punishable under section 4 of PMLA,” the memo stated.

Although she has not been named as an accused in any of the six charge sheets filed by the financial crimes probe agency since November 2023, K Kavitha was referred to as a key person in the excise policy-related irregularities in the court documents.

The primary allegation against Kavitha is that she was part of a cartel, the alleged ‘South Group’ of businessmen and politicians, that paid ₹100 crore kickbacks to AAP leaders in lieu of getting nine retail zones under the Delhi excise policy. Other members in this group were YSR Congress MP Magunta Srinivasulu Reddy, his son Raghav Magunta, Sarath Reddy (promoter of Aurobindo Group) and Delhi businessman Sameer Mahendru.

She has claimed in the past that she had done nothing wrong and alleged that the Bharatiya Janata Party (BJP) was using the ED as it could not gain backdoor entry into Telangana.

The BRS leader is under the Central Bureau of Investigation (CBI) scanner as well, which is conducting a parallel corruption probe in the case and had issued a summons to her last month, but she cited an exemption granted by the Supreme Court.

It has been alleged that Kavitha was in touch with AAP’s then communication in-charge Vijay Nair, who was meeting liquor businessmen, and politicians at the time of formulation and implementation of the controversial now-scrapped excise policy in the national capital.

Citing her former chartered accountant Butchibabu Gorantla’s statement recorded before it in February last year, ED has claimed she was part of the conspiracy to pay kickbacks to AAP leaders to get retail liquor business in Delhi.

“There was a political understanding between K Kavitha and the chief minister of Delhi (Arvind Kejriwal) and (former) deputy CM (Manish Sisodia) of Delhi. In that process, K Kavitha has also met Vijay Nair (former AAP communications in-charge) on 19th-20th March 2021”, ED said, citing Butchibabu’s statement.

“Vijay Nair was trying to impress K Kavitha with what he could do in the policy. Nair was acting on behalf of the CM of Delhi Arvind Kejriwal, and Dy CM Manish Sisodia. The understanding was that in exchange for the favours that can be done in the policy and the Delhi liquor business for K Kavitha, some funds would be given to the AAP,” it added.

It further alleged that “out of the deal between K Kavitha and top AAP leaders, she was given stakes in partnership with Sameer (Mahendru) and distribution of Pernod Ricard”.

According to the ED fifth charge sheet in the case filed on May 4, 2023, businessman Sarath Reddy, who last year turned approver in the case, was present in a meeting with Indo Spirits owner Sameer Mahendru, Arun Pillai, Abhishek Boinpally, and K Kavitha in early 2022 at latter’s residence in Hyderabad.

“In that meeting, Kavitha said to Sameer (Mahendru) that Arun (Pillai) is like family to her and doing business with Arun is doing business with Kavitha and that they will take this relationship to a larger scale in multiple states and expand majorly,” the charge sheet states.

Officials said Reddy’s statement is crucial for establishing charges against Kavitha.

ED has also alleged that Arun Pillai, who looked after Kavitha’s interests in the South Group, also represented her benami assets.

In its sixth charge sheet, filed on December 2 last year, ED has claimed that kickbacks worth ₹45 crore were used by AAP in the Goa assembly elections campaign in 2022, making it a direct beneficiary of the proceeds of crime.

The Delhi government’s 2021-22 excise policy aimed to revitalize the city’s flagging liquor business. It aimed to replace a sales-volume-based regime with a license fee for traders and promised swankier stores, free of the infamous metal grilles, ultimately giving customers a better buying experience. The policy also introduced discounts and offers on the purchase of liquor, a first for Delhi.

The plan, however, came to an abrupt end with Delhi’s lieutenant governor Vinai Kumar Saxena recommending a probe into alleged irregularities in the regime. This ultimately resulted in the policy being scrapped prematurely and being replaced by the 2020-21 regime, with the Aam Aadmi Party (AAP) alleging that Saxena’s predecessor sabotaged the move with a few last-minute changes that resulted in lower-than-expected revenues.