Published by Global Banking and Finance Review
Posted on January 10, 2025
By Arpan Chaturvedi
NEW DELHI (Reuters) - India's federal investigating agency has accused liquor giant Diageo and Sequoia Capital of making suspicious payments to a politician's firm to seek favourable government decisions, it said in a document Reuters reviewed on Friday.
In the document, the Central Bureau of Investigation (CBI) says Diageo Scotland made a suspicious fund transfer to Indian politician Karti Chidambaram's firm after a 2005 ban on sale of its duty-free products hit sales of its Johnnie Walker whisky.
In the case document on its website, the agency said an investigation showed a payment of $15,000 to the firm was intended to influence public servants to lift the ban on Diageo, rather than for consultancy work as it had been described.
"In order to lift the ban, Diageo Scotland approached Karti P Chidambaram," the agency said in the document, part of its formal case registered against Diageo and Sequoia, after an investigation launched in 2018 into investment approvals.
It did not say when the alleged payment by Diageo was made.
The agency said Diageo suffered a huge loss from the 2005 embargo on its products by the India Tourism Development Corp, a firm majority-owned by the government that had a monopoly on sales of imported duty-free liquor.
Telephone calls to seek comment from Karti Chidambaram, the son of former finance minister P Chidambaram, went unanswered. A member of India's main opposition Congress party, he is a lower house MP.
A spokesperson for Diageo's India unit, United Spirits, in which the British giant owns a stake of about 56%, declined to comment. Diageo's British unit did not immediately respond to a request for a comment on the development.
The case presents a new challenge for Diageo after anti-graft police launched an investigation last year into billing and discount practices in the capital, New Delhi.
The company has said it is cooperating with that agency.
Separately, the CBI case document accused the Mauritius unit of Sequoia Capital of suspicious transactions with the firm of Karti Chidambaram, who was in a position to influence public servants to secure approval for an Indian investment in 2008.
Sequoia's proposal, the CBI said, was approved in November by Karti's father, P Chidambaram, who was finance minister at the time. In response to a text message from Reuters, P Chidambaram, also a Congress politician, said he had no comment.
The CBI case document does not name the former finance minister as one of those accused in the case.
Sequoia did not immediately respond to a Reuters request for comment on the accusations.
A detailed investigation will look for any violations of India's criminal law, including its anti-graft law that sets penalties for bribes to public servants, the CBI added in the document.
Punishments can be jail terms of up to seven years, and unspecified fines.
(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra and Clarence Fernandez)
