Kavitha Kalvakuntla, daughter of BRS boss and former chief minister K Chandrasekhar Rao, was arrested by the Enforcement Directorate on March 15 at her Banjara Hills residence in Hyderabad in a money laundering case connected to the Delhi liquor scam. Those who haven't closely followed the case might wonder how a politician from the South could possibly be linked to an alleged multi-crore racket in Delhi.
The probe agency attributes it to the lure for easy money. It describes her as a key conspirator in the alleged scam, of which the subsequently arrested Delhi Chief Minister Arvind Kejriwal was the kingpin. How the ED proves the allegations in the trial court remains to be seen. Incidentally, Kejriwal is the first chief minister in the country to be arrested while in harness.
Kavitha, a Lok Sabha member from Nizamabad from 2014 to 2019, is now a member of the state legislative council. The ED alleges that she conspired with top leaders of the Aam Aadmi Party (AAP), including its convenor Kejriwal and then Deputy CM and Minister of Excise, Manish Sisodia, and gave them Rs 100 crore in bribe. In exchange, Kavitha and other members of the ‘South Group’ or ‘South Lobby’ got undue favours in the Delhi excise policy formulation and implementation and made Rs 192.8 crore in profits, the ED claims.
South Group
The story opens with the AAP government in Delhi constituting an expert committee in September 2020 to reform the liquor trade and open it up to private players. The trade was run by the government at that point in time. The expert committee submitted its report in October 2020. A Cabinet meeting held in February 2021 decided to constitute a Group of Ministers (GoM) to examine all aspects of the then system, study the report of the expert committee and go through the comments received from all stakeholders and the general public. The GoM was headed by Sisodia, who also held the excise portfolio. Months later, the new excise policy 2021-22 came into force on November 17, 2021.
The probe agency alleges that during the formulation of the new excise policy, the then social media in-charge of AAP Vijay Nair approached Hyderabad-based businessman Arun Ramachandra Pillai, a close associate of Kavitha, with a business proposition for mutual benefit. The proposal was to exploit the opportunity of privatisation of the Delhi liquor market to make big money. Arun Pillai is believed to have shared it with Kavitha who took it forward. To increase their profit margins, Kavitha and her associates influenced the Delhi liquor policy, the ED alleges.
The then YSR Congress MP Magunta Sreenivasulu Reddy, whose family has been in the liquor business for more than 70 years, approached Kejriwal to explore how to enter the Delhi spirit market, the ED alleges. He met the chief minister on March 16, 2021 in Delhi. In a statement given by him to the ED, he said: “Kejriwal said that … earlier Kavitha, daughter of Chief Minister of Telangana K Chandrasekhar Rao, has already approached me to do liquor business in Delhi and offered to pay Rs 100 crore to the AAP and she will call you in this connection or you call her, discuss about the future, since their team is already working in Delhi.” Sreenivasulu Reddy has now joined the TDP.
According to the ED, Kavitha subsequently called Sreenivasulu Reddy on March 19, 2021. The next day, when they met at her residence in Hyderabad, Kavitha allegedly told him that Kejriwal had spoken to her and sought Rs 100 crore in cash. She asked Sreenivasulu Reddy to contribute Rs 50 crore to the pool if he wanted to be part of the deal, the ED alleges. The probe agency claims that Kavitha told him that her chartered accountant Buchi Babu would call on him and his son Raghav Magunta to take the proposal forward. When Buchi Babu met the father-son duo the next day, Raghav told him that he would be able to arrange Rs 30 crore. Finally, Rs 25 crore in cash was paid to Kavitha’s close associates Abhishek Boinpally and Buchi Babu, the ED alleges.
Meanwhile, Aurobindo Pharma’s director Sarath Chandra Reddy allegedly came into contact with Kavitha’s team. According to the ED, Kavitha shared Kejriwal's demand of Rs 100 crore with Sarath for a favourable excise policy and other benefits in the Delhi liquor business. He agreed to be part of the racket.
That was how the South Group — consisting of Kavitha, Sarath Chandra Reddy, Magunta Sreenivasulu Reddy and his son Raghav Magunta — was formed, according to the ED. The South Group is then said to have partnered with liquor businessman Sameer Mahendru’s Indospirit and entered the Delhi liquor business. Probe agencies claim that Kavitha had a 33% share in Indospirit through Arun Pillai, her proxy. In the South Group, Abhishek Boinpally and Buchi Babu allegedly served as Kavitha’s representatives. The ED claims that Kavitha, Arun Pillai, Vijay Nair and businessman Dinesh Arora met at Oberoi Maidens Hotel in New Delhi and discussed ways to recover the Rs 100 crore bribe.
The ED alleges that the South Group transferred Rs 100 crore to the AAP through the hawala route and some shell companies. Of that, the AAP used Rs 45 crore for its Goa Assembly election campaign, the probe agency recently told a Delhi court. According to the ED, one of Kavitha’s staff members revealed that he collected two bags full of cash from Dinesh Arora’s office and delivered it to Vinod Chauhan, an associate of Sisodia.
FIR, probe, arrests
This newspaper broke the story on the scam in its June 22, 2022 edition. The headline read, "CBI may look into AAP govt's new liquor policy." With the situation spinning out of control, the Delhi government tried to limit the damage by scrapping the new policy on July 31, 2022. After Delhi Lieutenant Governor Vinai Kumar Saxena wrote to the Ministry of Home Affairs to investigate the policy formulation, the CBI registered a First Information Report (FIR) on August 17, 2022 and initially named Sisodia as an accused in the case.
Though Kavitha's name did not figure in the FIR, her close associate Arun Pillai's did. In September 2022, the ED arrested Sameer Mahendru, and in November that year the ED arrested Abhishek Boinpalli, Sarath Chandra Reddy and Vijay Nair.
Curiously, Aurobindo Pharma bought electoral bonds worth Rs 5 crore on November 15, 2022, five days after its director Sarath Chandra Reddy was arrested. In all, it donated electoral bonds worth Rs 34.5 crore to the BJP, Rs 15 crore to the BRS and Rs 2.5 crore to the Telugu Desam Party.
On December 11, 2022, Kavitha was questioned by the CBI at her residence in Hyderabad for almost seven hours. On March 7, 2023, the ED issued summons to Kavitha directing her to appear before it on March 9, 2023. She skipped it, but attended questioning on March 11. On March 21, she appeared before the ED. The agency recorded Kavitha’s statements and seized her phones.
In September 2023, the ED summoned her again, but she skipped it citing a petition filed by her in the Supreme Court that was pending. In January 2024, the ED summoned her again but she ignored it. Finally, on March 15, the ED raided Kavitha’s house in Hyderabad, conducted searches for hours and arrested her.
Approvers spill the beans
The agency claims Arun Pillai is a benami of Kavitha. In January 2023, it attached a land parcel worth Rs 2.23 crore in Vattinagulapally, Hyderabad owned by Pillai and also 50 vehicles worth Rs 10.23 crore owned by Indospirit.
From the South Group, Magunta Sreenivasulu Reddy, his son Raghav Magunta and Aurobindo Pharma’s Sarath Chandra Reddy turned approvers in the case. Dinesh Arora, too, turned approver. It left Kavitha isolated. The ED relied on their information to go after Kavitha.
The agency claims to have collected records and other evidence from the Oberoi Maidens Hotel in New Delhi to prove that Kavitha attended a meeting called by Vijay Nair. The agency also retrieved WhatsApp chats between the accused and FaceTime call records. It also claims to have incriminating documents sourced from the mobile phones of the accused.
Destruction of digital evidence
According to the ED, Kavitha deleted evidence and formatted her mobile phones. On March 11, 2023, she produced one phone before it. On preliminary examination, despite her own disclosure that she uses FaceTime and WhatsApp from that device, no data was found in those apps. On March 21, 2023, she produced nine more phones. On preliminary examination, the ED found that she had formatted all of them. The ED then sent the 10 phones to the National Forensic Sciences University (NFSU) for data extraction and forensic examination. As per the report of NFSU, at least four devices were formatted after the ED issued summons to her on March 11, 2023.
The ED in its remand report accused Kavitha of actively destroying the digital evidence to conceal her role and involvement in the scam.
Key dates
November 2021
Delhi government introduces new liquor policy
July 31, 2022
Policy withdrawn after national uproar
August 17, 2022
FIR lodged by CBI against 15 accused, including the then Delhi Deputy CM Manish Sisodia and Kavitha’s close associate Arun Ramachandra Pillai
October 17, 2022
CBI questions Manish Sisodia
December 11, 2022
CBI questions K Kavitha at her residence in Hyderabad for almost seven hours
February 26, 2023
CBI arrests Manish Sisodia
March 11, 2023
ED questions Kavitha in New Delhi for about 9 hours
March 20 and 21, 2023
ED again questions Kavitha in Delhi; gets custody of 10 mobile phones belonging to her
January 2024
ED summons Kavitha, but she skips it
February 21, 2024
CBI summons Kavitha. No show again
March 15, 2024
ED searches Kavitha’s Banjara Hills residence in Hyderabad for hours, arrests her at 5.20 pm
