ED Uncovers Massive Financial Fraud Involving TASMAC, Distilleries, and Bottling Companies in Tamilnadu

(Judicial Quest News Network)

On March 6, 2025, the Directorate of Enforcement (ED) conducted extensive search operations across multiple districts of Tamil Nadu, targeting various entities associated with the Tamil Nadu State Marketing Corporation Limited (TASMAC). The search was conducted under the Prevention of Money Laundering Act (PMLA), 2002, as part of an investigation into widespread corruption and financial irregularities within TASMAC and its affiliated companies.

The ED’s probe stems from multiple FIRs registered under the Prevention of Corruption Act, 1988, addressing several serious offenses involving TASMAC. The investigation primarily focuses on the following areas:

1. Excessive Charges at TASMAC Shops – TASMAC retail outlets were found to be charging customers more than the actual Maximum Retail Price (MRP).
2. Kickbacks from Distilleries – Distillery companies were found to be providing bribes to TASMAC officials in exchange for lucrative supply orders.
3. Bribery and Corruption Among Senior TASMAC Officials – Senior officials were involved in taking bribes for transferring and posting staff, as well as for various other favours.

Key Findings During the Search Operations

During the search operations at TASMAC offices, a wealth of incriminating evidence was discovered, exposing significant irregularities:

1. Transport Tender Manipulation – Evidence uncovered suggests that the transport tender allocations were manipulated, with issues such as mismatched KYC details and a lack of proper documentation for final bidders. Furthermore, tenders were awarded with only one applicant, despite the requirement for competitive bidding. TASMAC paid over Rs. 100 Crore annually to transporters.
2. Bar License Tender Irregularities – The ED found clear evidence of manipulation in the bar license tender process, where applicants lacking essential documentation (such as GST/PAN numbers and proper KYC details) were awarded tenders.
3. Collusion Between Distilleries and TASMAC Officials – Evidence revealed direct communication between distillery companies and senior TASMAC officials, aiming to secure increased indent orders and other illicit favours.

These findings point to various offenses under the Prevention of Corruption Act, 1988, generating Proceeds of Crime (POC) as defined under PMLA, 2002.

Financial Fraud Involving Distilleries and Bottling Companies

The investigation also uncovered a major financial fraud involving distilleries and bottling companies. Distilleries such as SNJ, Kals, Accord, SAIFL, and Shiva Distillery, along with bottling companies like Devi Bottles, Crystal Bottles, and GLR Holding, were found to be involved in a well-coordinated scheme of unaccounted cash generation and illicit payments.

Key findings include:

• Inflated Expenses and Bogus Purchases – Distilleries systematically inflated their expenses and fabricated false purchases through bottle-making companies, siphoning off over Rs. 1,000 Crore in unaccounted cash.
• Kickbacks to TASMAC – The unaccounted funds were used to pay kickbacks, helping distilleries secure increased supply orders from TASMAC.
• Bottling Companies’ Role – Bottling companies played a crucial role by inflating sales figures, allowing distilleries to route excess payments, which were then withdrawn in cash and returned after deducting commissions.

This collusion resulted in the generation of unaccounted cash, which was manipulated through fake financial records and concealed cash flows, ultimately leading to substantial profits for the involved parties.

Ongoing Investigation

The ED’s investigation into the fraudulent activities of TASMAC, distilleries, and bottling companies continues, with a focus on examining the roles of employees, associates, and other key individuals connected to the illicit activities. Further actions are expected as the investigation progresses.