DMK MP Jagathrakshakan in ED crosshairs over Rs 20-crore ‘suspicious’ transaction

Enforcement Directorate (ED) officials in Chennai are probing a “suspicious” Rs 20-crore transaction between SNJ Distilleries and Accord Distilleries, the two prominent liquor corporates in the state. The involvement of Accord Distilleries raises eyebrows as it is owned by the family of sitting DMK MP S Jagathrakshakan. ED officials say that the new evidence ties into the alleged Rs 1,000-crore TASMAC liquor scam in which money laundering has been alleged.

‘Marketing expense’ raises red flag

The ED on March 6 raided at least 25 locations linked to TASMAC’s liquor supply chain. These operations targeted properties linked to associates of Tamil Nadu Excise Minister Senthil Balaji as well as entities like SNJ Distilleries, owned by DMK supporter SN Jayamurugan, and Accord Distilleries. While analysing the documents seized during the raid, the officials spotted a Rs 20-crore entry in SNJ books in favour of Accord Distilleries made in June 2020. This was described as “marketing expense”, but was written off in the same financial year, raising a red flag.

Also read: ‘Exceeded authority’: TN govt challenges ED’s Tasmac probe in Madras HC

An ED official, doubting the legitimacy of the transaction, said, “There was no evidence of marketing services rendered by Accord Distilleries to validate this Rs 20-crore transfer. The notion that two competing distilleries could engage in such a transaction which could eventually be written off raised the suspicion that it could be a case of money laundering.”

Distilleries evade summons

The officials are probing further trying to ascertain whether the financial transaction was a facade for channelling illicit funds. Despite receiving summons, neither SNJ nor Accord Distilleries has responded to ED’s inquiries till the writing of this story. The agency will submit its findings in the court once they hear from the distilleries.

An ED officer said, “The transaction, that took place during the AIADMK regime, led us to suspect that Accord Distilleries might have facilitated SNJ Distilleries to secure TASMAC orders, possibly coordinating with TASMAC officials to fulfill their indent.”

Also Read: FEMA case: Rs 908-crore penalty against DMK MP, says ED

Bottling firms as intermediaries

The fresh evidence builds upon previous ED’s findings of “inflated” expenses, “fraudulent” invoices, and alleged “kickbacks” to TASMAC officials, implicating distilleries such as SNJ, Kals, Accord, SAIFL, and Shiva, as well as bottling companies like Devi Bottles and Crystal Bottles.

The ED, as reported earlier by The Federal, has identified bottling companies as key players in the alleged kickback. They are accused of acting as intermediaries by creating inflated invoices or documents for non-existent liquor shipments, often represented by "empty bottles," to obscure the flow of unaccounted cash. This cash, generated from inflated prices or fictitious sales, was then funnelled as kickbacks to TASMAC officials allegedly in exchange for supply contracts, thereby allowing these distilleries to maintain their dominance in the state’s lucrative liquor market.

Also Read: TASMAC issue: Madras HC directs ED not to proceed further

How slush fund was generated

ED officials claimed to have revealed a sophisticated layer in the liquor scam, in which bottling companies were instrumental in facilitating bribes to TASMAC officials under the pretence of "business promotion." The agency reports that these companies acquired used bottles from bars and street vendors for only Rs 1-2 each, subsequently selling them to distilleries at an inflated price of Rs 6-8 per bottle, thus generating substantial unaccounted profits.

ED alleges that bottling firms withdrew nearly half of this cash and redirected it back to the distilleries, which utilised it as a “slush fund” to bribe TASMAC officials. This operation, ED claimed, “disguised as legitimate business transactions”, enabled distilleries to secure supply contracts and favourable treatment, with bottling companies serving as a crucial link in laundering money and perpetuating a network of corruption.

Also read: Tasmac 'scandal': TN minister Senthil Balaji denies allegations, says will fight legally

Meanwhile, the ED stands accused of a “partisan” approach, only booking individuals and companies linked to opposition leaders, conveniently looking the other way when it concerns people from the ruling dispensation.