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In a major administrative action, the Enforcement Directorate (ED), which is probing the financial investigation into the alleged liquor scam of Andhra Pradesh, has issued a formal summons to senior YSR Congress Party (YSRCP) leader and former minister Ambati Rambabu. The Central Investigation Agency has given him clear instructions to appear personally at its regional office in Hyderabad on November 4 and record his statement during interrogation. According to primary information received from the officials, this entire episode is related to awarding of huge contracts related to liquor transportation, making arbitrary changes in the tender conditions and providing illegal financial benefits to favored companies during the previous rule of YSR Congress Party. This summon sent to the former minister is a strong indication that the investigating agency is now reaching out to the top political faces of the then government by connecting the links of bureaucrats and middlemen, which has brought a huge boil in the regional politics of the state.
This strict action of ED has not happened suddenly, but even before this the agency has tightened the screws on many influential people associated with this case. About nine months ago, Karumuri Sunil Kumar, son of former minister Karumuri Venkata Nageswara Rao, was arrested on June 18 under the Prevention of Money Laundering Act (PMLA) in the liquor transportation scam. The investigating agency had expanded the scope of its investigation on the basis of financial clues received from different locations in Hyderabad and Vijayawada. During the appearance of Ambati Rambabu, a long list of important questions related to liquor supply policy, alleged political interference in allocation of transportation contracts and suspicious transactions of funds have been prepared, through which efforts are being made to reach out to the ultimate beneficiaries of the financial irregularities.
To get to the roots of this financial scam, the Hyderabad zonal office of ED had conducted a massive search operation at five key locations simultaneously under the stringent provisions of PMLA on June 11. During this raid, a thorough search was conducted at the residential and business premises belonging to Karumuri Sunil Kumar, his father, former IT advisor to Andhra Pradesh government and Kesireddy Raja Shekhar Reddy, considered to be the main conspirator of this alleged liquor syndicate, Dontireddy Vasudeva Reddy, former managing director of Andhra Pradesh State Beverages Corporation Limited (APSBCL), Vijaya Narasimha Reddy and Vallu Sandeep. In this raid, Enforcement Directorate officials had seized documentary evidence of movable and immovable properties worth crores.
During the search operation, the investigating agency had seized several luxury items, a high-end luxury car, rare branded watches worth Rs 94.5 lakh and a huge amount of unaccounted cash. Apart from this, important documents related to suspicious Joint Venture Agreements, raw diaries of fake cash transactions and purchase and sale of benami properties were also recovered. After receiving these incriminating evidences, on the same day, ED took immediate action and arrested the main accused Kesireddy Raja Shekhar Reddy and former MD Dontireddy Vasudev Reddy, information from the remand diary obtained from them led the investigation to the doorstep of former minister Ambati Rambabu.
The Enforcement Directorate had formally initiated this money laundering case on the basis of an FIR lodged by the Andhra Pradesh Criminal Investigation Department (CID). This original FIR was registered on an official complaint submitted by the Additional Secretary, Vigilance Department of the state government. The vigilance investigation had shockingly revealed that the state exchequer directly suffered a huge financial loss of Rs 195.33 crore due to deliberate and systematic irregularities in liquor transportation contracts. To carry out this entire loot, administrative rules and pre-determined conditions of the tender were kept aside.
In the investigation, ED claimed that the essential conditions of liquor transportation tender of APSBCL were deliberately changed from the top level so that other qualified and capable logistics companies of the market could be excluded from the competition. This policy manipulation was done only with the aim of giving undue advantage to selected private companies. Among these, ‘Sigma Supply Chain Solutions Private Limited’ (SSCSPL) and later ‘Prasad Transports’ were brought forward. According to the financial investigation agency, these companies were shell entities that grabbed tenders only on paper, while the financial strings and actual control of these companies were in the hands of some very influential politicians and their close associates sitting behind the scenes.
According to the ED’s detailed charge sheet and investigation report, a multi-layered secret network was created to transfer government money to private pockets through liquor transportation. In this alliance, Kesireddy Raja Sekhar Reddy, Tukkula Ishwar Kiran Kumar Reddy and Anjani Kumar along with the then managing director of the corporation Dontireddy Vasudeva Reddy had hatched the entire plan. These people, in collusion with each other, got the contracts for transportation of liquor allotted at a price almost double the actual market rates. On paper, SSCSPL was used only to show the face of a legitimate tenderer, while the actual transportation on the road was handled by Tukkula Ishwar Kiran Kumar Reddy alias Kiran Kumar and his team.
The most shocking fact revealed in the investigation was that the transportation rates of liquor carton boxes were artificially increased. In the previous system, the average rate of transportation per carton box at the district level was around Rs 19.68, which was directly increased to Rs 35.57 per box without any logic or market analysis. With this huge margin, the liquor syndicate earned illegal profits worth crores of rupees. Not only this, the agency’s investigation also revealed that this syndicate had distributed small sub-contracts of transportation to local political leaders of various districts, their relatives and shell companies so that there was no opposition at any level and the distribution of government funds continued unhindered.
The investigating agency has termed Kesireddy Raja Shekhar Reddy, former IT advisor to the Andhra Pradesh government, as the mastermind and strategist of this entire scam. By using his political clout and the intimidation of his position, he created this game in collaboration with Dontireddy Vasudeva Reddy, the former MD of the corporation. This is a serious allegation against Vasudeva Reddy that he ended the already successfully running decentralized transport system of APSBCL in one fell swoop. Earlier, liquor transportation was managed in a transparent manner through district level committees, but that was changed and a centralized policy was imposed for the entire state. For this, misleading reports were sent to the government and the excuse of imaginary technical hurdles was made.
Not only this, Dontireddy Vasudeva Reddy implemented this centralized policy without obtaining the mandatory statutory approval from the state cabinet or the competent government authority. After this, the time limit of the transport contract given to SSCSPL was repeatedly extended illegally without any fresh tender. This extension continued even after the original contract expired. Due to this administrative arbitrariness, tender manipulation and artificial increase in rates, there was a direct loss of Rs 195.33 crore to the government revenue. Now that ED has summoned former minister Ambati Rambabu, the questioning will try to find out what direct or indirect role he had in this change of transport policy and extension of contracts and whether any part of this illegal commission was used in election funding or creation of personal properties.