Published by Global Banking and Finance Review
Posted on January 10, 2025
By Arpan Chaturvedi
NEW DELHI (Reuters) -India's federal investigating agency has alleged that DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo and Sequoia Capital made suspicious payments to a politician's firm in an attempt to attain favourable government decisions, a document reviewed by Reuters on Friday showed.
The Central Bureau of Investigation (CBI) alleges that DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo Scotland made a suspicious transfer to Congress Party lawmaker Karti Chidambaram's firm after a 2005 ban on the sale of its duty-free products hit Johnnie Walker whisky sales.
The agency said in the case document on its website that an investigation showed a payment of $15,000 to Chidambaram's firm was intended to influence public servants to lift the ban, rather than for consultancy work as it was described.
"In order to lift the ban, DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo Scotland approached Karti P Chidambaram," the agency said in the document, which is part of its formal case registered against DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo and Sequoia, after an investigation launched in 2018 into investment approvals.
It did not say when the alleged payment by DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo was made.
A spokesperson for DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo's India unit, United Spirits, in which the British drinks giant owns a stake of about 56%, declined to comment. DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>Diageo did not immediately respond to a request for comment on the allegation.
U.S. venture capital group Sequoia did not immediately respond to a request for comment.
Chidambaram, who is a member of India's lower house of parliament, filed an application before a New Delhi court on Friday denying the CBI allegations and said he was "neither a shareholder nor Director" of the firm in question.
The case "is mala fide and is borne out of political vendetta," his court filing said.
Reuters was unable to contact Chidambaram, who is the son of former finance minister P Chidambaram and a lower house member of parliament representing India's main opposition party.
The CBI said DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>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.
The case presents a new challenge for DIAGEO-RESULTS-d958c858-8700-4393-9951-19bfdc8be960>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 alleges the Mauritius unit of Sequoia Capital made suspicious transactions with the firm of 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 P Chidambaram, who was finance minister at the time. In response to a text message from Reuters, P Chidambaram, also a Congress party politician, said he had no comment.
The CBI document does not name the former finance minister as one of those accused.
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 said.
Punishments can involve jail terms of up to seven years, and unspecified fines.
(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra, Clarence Fernandez and Alexander Smith)
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