ED accuses Pernod Ricard of making illegal profits in Delhi

Calling ED’s allegations inaccurate, Pernod Ricard India told Reuters it would demonstrate its legal compliance in court and added that it is cooperating with the authorities.

The Delhi court has asked the accused to be present at the next hearing on February 23. Pernod Ricard India’s Chief Operating Officer Rajesh Mishra and Benoy Babu, the head of its international brands business, face a hefty fine and jail term of 3–7 years if found guilty.

Pernod Ricard India’s net profit in 2021-22 stood at $176 million, its regulatory disclosures show. Pernod has 17% market where in India through its brands Chivas Regal, Glenlivet and Absolut Vodka.

In a court filing in November, ED said Delhi government’s liquor policy prohibited manufacturers from participating in retail sales but Pernod effectively used corporate guarantees to invest in retailers who bid for store licenses. Pernod has denied any wrongdoing.

In the new filing, ED cited a Pernod PowerPoint presentation to say that the company had an internal plan to “take control of retail shops, create flagship stores” in a bid to control ”retail businesses in Delhi”.

Pernod’s ”support” to the associates who were bidding for licences in Delhi had the potential to generate an additional $15 million ”benefit over 3 year period”, ED said quoting an email sent by Mishra, when he was acting India chief financial officer (CFO) in mid-2021, to group CFO Helene de Tissot.

Mishra further wrote that the company’s partnership with retailers “will also enable us to counter local players’ threat, our other key battle ground”.

ED stated that Pernod was part of a lobby to privatise retail liquor stores and alleged that Babu was “fully involved in the conspiracy” and had sent 4,000 emails to “influence policy formulation to suit the interest of Pernod”.

Following the emails, a government panel formalised a policy wherein authorities would exit the retail business and let only private players bid for store licences.

Delhi revoked that policy last year, ending the reign of private retail shops. Liquor is now only sold via government-run shops.

Babu was arrested in November for alleged violations of Delhi’s liquor policy and his bail plea was rejected this week and he continues to be in jail. He has told the court his arrest is ”illegal” and he was ”falsely implicated”. Mishra has not been arrested.