Exclusive: ED spots black money link between Tamil Nadu distilleries and Tasmac

In fresh trouble for Tamil Nadu minister V Senthil Balaji, the Enforcement Directorate (ED) has apparently found evidence that private distilleries in the state are a major channel for generating black money, which is then funnelled through Tamil Nadu State Marketing Corporation (Tasmac) officials, including senior ones.

The central agency has found these while searching various locations linked to the beleaguered Prohibition and Excise Minister and others in the past three days, ED sources in the know told The Federal. Tasmac officials allegedly get a share of the “illicit funds” generated by the distilleries via kickbacks.

Tasmac is the sole government agency engaged in the wholesale and retail sale of Indian Made Foreign Liquor (IMFL) in Tamil Nadu.

Also read: Tamil Nadu: ED raids in fresh case against Senthil Balaji, others linked to TASMAC

Massive raids by ED teams

Big teams of the central agency — including some 35 senior officials and hordes of support staff — have been searching various private distilleries in the state over the past few days.

These raids are part of a broader money-laundering investigation aimed at uncovering alleged financial irregularities and malpractices within the liquor trade, particularly concerning Tasmac.

At least two dozen locations — including several that have connection with Senthil Balaji, who is also Tamil Nadu’s Electricity Minister — have been searched across various districts. At the time of this story being published, the raids were still on.

The ED has also been probing the role of the DMK leader in the alleged “cash-for-jobs scam” in the state transport department in another money-laundering investigation. Senthil Balaji was arrested by the central agency in 2023 and is out on bail now.

Also read: SC dismisses plea for review of order granting bail to TN Minister Senthil Balaji

Rs 40 lakh confiscated

So far, the ED has claimed to have confiscated Rs 40 lakh in unaccounted cash — in short, black money — from the various sites it has scanned. The searches that began on March 6 initially targeted the Tasmac headquarters in Chennai. But they later spread to several private distilleries throughout Tamil Nadu.

ED sources told The Federal that they have evidence pointing to the generation of black money using various methods by distilleries, which is allegedly being funnelled through Tasmac officials, including senior ones. However, the agency is not yet clear about the modus operandi and is examining various possibilities.

It suspects that the Tasmac retail outlets receive unaccounted liquor stocks directly from distilleries, without any documents. These are sold for cash, and the money is allegedly shared between the company and the officials.

Also read: TN minister Balaji delaying trial in cash-for-job scam case: ED to SC

Notable distilleries searched

The ED’s investigation builds upon FIRs filed by the Directorate of Vigilance and Anti-Corruption (DVAC) between 2016 and 2021, recording the confiscation of unaccounted cash from Tasmac outlets.

The ED has so far focused on around 25 locations associated with Senthil Balaji, including the Tasmac headquarters located in the CMDA Towers, Egmore (Chennai) as well as multiple distilleries and related sites across Tamil Nadu.

Notable distilleries, such as SNJ Distilleries, Accord Distilleries (associated with DMK MP S Jagathrakshakan), and Kals Distilleries, were among those subjected to searches.

Things under ED scanner

A senior ED official told The Federal that a significant number of documents have been seized from both Tasmac and the distilleries. “We are investigating all facets, including the allegations of illegal sales,” the source remarked.

The sources also indicated that the agency is exploring the possibility that the unaccounted cash it seized was utilized for money-laundering activities.

Also read: ‘We grant bail and you become minister next day’: SC in Senthil Balaji case

Furthermore, the ED is scrutinising claims regarding irregularities in liquor procurement practices, including the acquisition of certain brands without adequate justification based on sales data, which may have benefited specific distilleries.

Reacting to the searches, Senthil Balaji told media persons in: "I will react to the ED raid once the searches are over, he said at Coimbatore

Longstanding allegations

Tasmac, which manages over 5,000 retail liquor outlets and contributes significantly to the state’s revenue (exceeding Rs 30,000 crore annually in recent years), has faced longstanding allegations of corruption, price inflation, and black-market operations.

Previous events, including the 2019 Income Tax raids on SNJ Distilleries which revealed Rs 4 crore in unaccounted cash, along with the DVAC investigations that uncovered the practice of overcharging at Tasmac shops, support claims of financial impropriety involving Tasmac officials and their interactions with distilleries.