The raid at the TASMAC offices is significant in the state. The corporation is under the jurisdiction of V. Senthil Balaji, the state minister for the prohibition and excise department.
The ED arrested Senthil Balaji on 14 July 2023 in connection with a money laundering case in an alleged cash-for-jobs scam during the previous All India Anna Dravida Munnetra Kazhagam (AIADMK) government between 2011 and 2015 when he was the transport minister.
In just less than two months, the ED also filed its first charge sheet in the matter, running into roughly 3,000 pages. The charge sheet said that Senthil Balaji misused his official position as minister in the alleged scam.
After languishing in prison for over a year, the Supreme Court granted him bail on 26 September 2024. Out of jail, Senthil Balaji was again made a minister, this time in charge of the prohibition and excise department.
When did the ED probe begin
The ED began its raid on 6 March, reaching multiple places linked to TASMAC such as the corporation headquarters in the Thalamuthu Natarajan building in Egmore, Chennai.
Kicked off at noon, the ED searches extended to locations, including the offices of different liquor contractors and distilleries, including SNJ Distilleries on Greams Road, Akkadu Distillers in T. Nagar in Chennai, and Shiva Distilleries in Coimbatore.
The ED also searched the places of people associated with Senthil Balaji such as the residences of Kongu Mess owner Karur Mani, Sakthi Mess owner Sakthivel and Karur government contractor M.C. Shankar Anand.
Even after raids at multiple locations ended on the first day, the inquiry and searches at the TASMAC headquarters continued for three days. The ED allegedly made TASMAC officials, including Managing Director S. Visakan, stay at the headquarters to provide data and documents related to bar and transport tenders and other financial records.
After the raids, the ED demanded a detailed financial record of TASMAC, including the procurement data from 2020. According to the TASMAC officials, they provided all the financial records from all the 4,829 TASMAC retail outlets from the 2020 period.
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ED allegations
Days after the searches and inquiries at multiple locations, ED released a statement claiming that it had uncovered large-scale irregularities worth over Rs 1,000 crore in TASMAC operations.
The ED, in its statement, alleged that the retail shops had been charging excess of Rs 10-30 per bottle and claimed that TASMAC had received kickbacks from distilleries for supply orders, and bar license allocations.
The ED statement came just a day before the Tamil Nadu State government presented its budget at the state assembly.
“Searches revealed large-scale financial fraud involving distillery companies, SNJ, Kals, Accord, SAIFL, and Shiva, along with bottling entities such as Devi bottles, crystal bottles and GLR holding, exposing a well-orchestrated scheme of unaccounted cash generation and illicit payments,” the ED said.
The ED further said that its investigations had revealed that distilleries systematically inflated expenses and fabricated bogus purchases through, in particular, bottle-making companies, siphoning off over Rs 200 crore in unaccounted cash.
“These funds were then used for kickbacks to secure increased supply orders from TASMAC,” the ED stated in its press release on 13 March.
The ED added: “The findings confirm a network where unaccounted cash was deliberately generated through inflated and bogus expenses and subsequently utilized for purposes leading to huge profits.”
What Senthil Balaji said
Soon after the budget session, state excise minister Senthil Balaji, who had held the reins at TASMAC, alleged that the raids were politically motivated, a retaliation of the BJP-led central government against the Dravida Munnetra Kazhagam (DMK) for its stubborn stand against the three-language formula and delimitation issue.
“They have not given the details of the FIR, based on which they have raided our premises. They began the raid on 6 March and completed it in three days. But, the press releases come just a day before the budget session. By this, it is clear that they want to overshadow the welfare measures of the State government led by the DMK,” he said.
On 19 March, he told the assembly that the state government would legally challenge the ED’s raid at the TASMAC premises. “It’s been more than 10 days, and it has not given any explanation or details for the raids at the TASMAC premises,” he said.
On the same day, the Tamil Nadu government and the marketing corporation filed a writ petition before the Madras High Court, challenging the ED’s raid at the TASMAC premises.
On Thursday, the petition was up for hearing.
ED, TASMAC statements & HC order
In court, senior advocate Vikram Chaudhary, representing TASMAC, said that according to Section 17(1) of the Prevention of Money Laundering Act, only the director or an officer of at least the deputy director level could conduct such searches. He argued that the ED needed solid information, as well as a belief that a crime under the Act had happened, before such searches.
He also claimed that the ED violated privacy by entering TASMAC’s premises, taking documents, and grabbing employees’ mobile phones without a good reason.
Chaudhary told the court that the ED forced the workers of the marking corporation to stay for over 60 hours, with only the women TASMAC officials allowed to go home.
Additional Solicitor General A.R.L. Sundaresan, speaking for the ED, rejected Chaudhary’s claims. He said the employees were free to leave and that the ED had enough evidence to justify taking the items it did from the TASMAC premises.
The judges asked if the ED could legally hold the whole TASMAC office and staff, based on evidence against just a few people. They noted that while the ED had said it had sufficient proof, TASMAC complained that that proof wasn’t shared with them.
The bench questioned: “You might have information about one person or a small group. But can you lock down an entire office and keep all the staff under your control? Isn’t that a worrying situation?”
While the counsel appearing for the ED continued to deny the allegations, the counsel appearing for the government informed the court that his party was ready to produce the CCTV footage to support their claims.
The court then asked the ED to stop the proceedings against TASMAC, instead asking it to file a counter. The ED has also asked Chaudhary and its officers to produce the necessary documents for their arguments.
AIADMK’s reaction
After the ED released a statement a day before the budget session, AIADMK’s general secretary quickly seized the opportunity, questioning why the DMK government was not addressing the issue transparently, despite the ED statement claiming irregularities over Rs 1,000 crore.
Demanding to discuss the alleged financial irregularities in TASMAC, the AIADMK members walked out of the assembly during the budget session.
Speaking to the media outside the assembly on 14 March, he said, “The ED has said that there has been corruption of more than Rs 1,000 crore in TASMAC. The investigation is ongoing. Corruption worth over Rs 40,000 crore is possible in TASMAC. The government didn’t take any action even after the ED raid.”
He also demanded the DMK government resign, taking moral responsibility for the alleged corruption.
On Thursday, after the state-filed writ petition came up for hearing, E.P.S. criticised DMK for seeking the court’s intervention.
“The ED has identified a scam. Why is the government opposing this and running to court for intervention? You say you are brave, why are you scared of ED now?” he asked the reporters in Chennai on Thursday.
Tamil Nadu BJP’s reaction
Even as the raids were underway on 6 March, BJP state president K. Annamalai criticised the DMK government, stating that the state had become a land of corruption.
“During the AIADMK’s regime, Stalin, then the Opposition leader, would seek the response of the ruling party and their allies. Now, what is the response?” he said, questioning the CM on 6 March.
After the ED officially released a statement claiming financial irregularities of Rs 1,000 crore, Annamalai called it just the tip of the iceberg, the scam could be close to Rs 40,000 crore, and that “Stalin is bound to explain from who received such huge funds”, he questioned on 14 March.
Annamalai also accused M.K. Stalin of attempting to divert attention from the ED raid by invoking issues such as the three-language formula, New Education Policy and delimitation.
The DMK state unit also announced a protest outside the TASMAC headquarters on 17 March. However, senior BJP leaders were arrested hours before the scheduled protests, detained for a day and let off.
(Edited by Madhurita Goswami)
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