Despite repeated denials of any wrongdoing regarding the alleged violation of domestic rules—specifically using corporate guarantees to back retailers, involving top executives of its Indian unit—an internal investigation by French spirits giant Pernod Ricard revealed that there was truth to the claims.
According to an exclusive report by Reuters on Wednesday (December 4), the internal probe by the global beverages company found that top executives in its India business, including former chief operating officer Rajesh Mishra, had violated the law by colluding with alcohol retailers in New Delhi.
The investigation, commissioned by the company and conducted by Indian law firm Shardul Amarchand Mangaldas, found that these executives facilitated money laundering by offering $24 million in corporate guarantees to help retailers secure liquor licenses in exchange for stocking more of Pernod's products. This violated India's Delhi Excise Policy (DEP), which prohibited manufacturers from investing in retail, the news agency said.
The Enforcement Directorate (ED) accused Pernod Ricard India (PRI) of unlawfully facilitating these transactions and launched an investigation. The company denied wrongdoing, but the report recommended the dismissal of Mishra, who was found to have misled federal agents during questioning. PRI is contesting the charges in court, including a restriction on its brands in New Delhi, a key market.
PRI's involvement in the policy change that allowed private liquor stores in 2021 is also under scrutiny, as the company allegedly exploited the new law by supporting selected retailers to bid for licenses. Mishra and other executives, including a Pernod Asia chief, exchanged emails discussing the financial support for these retailers. The ED described this as an indirect investment in liquor retailing, which is prohibited.
In addition to the regulatory challenges, PRI is facing other legal issues in India, including a $250 million federal tax demand and two antitrust cases. Despite these challenges, India remains a crucial market for Pernod, contributing significantly to its global sales.