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Crores of rupees in bribes collected from liquor companies in exchange for supply orders from the Andhra Pradesh government eventually went into former Chief Minister YS Jagan Mohan Reddy’s hands, according to the Special Investigation Team probing the alleged Rs 3,500 crore liquor scam under the previous YSR Congress Party government.
This money was allegedly distributed to voters during the 2024 Assembly and general elections in Andhra Pradesh, as bribes to vote for YSRCP, the SIT said in its preliminary chargesheet filed on July 19.
The main accused in the case is Kessireddy Raja Shekhar Reddy (Raj), who was the IT advisor to Jagan when he was CM. Raj is accused of routing Rs 250 to 300 crore for YSRCP’s election expenses, along with YSRCP leader Chevireddy Bhaskar Reddy. While Raj was arrested in April, Bhaskar Reddy was recently arrested at the Bengaluru airport while allegedly trying to fly abroad.
On July 19, sitting YSRCP MP from Rajampet PV Midhun Reddy, who is accused number 4 in the case, was also arrested. Midhun is accused of being part of the ‘liquor syndicate’ that orchestrated the entire scam.
The SIT has named at least 48 individuals and companies as accused in the case, including former YSRCP MP V Vijaysai Reddy who has since quit the party; APSBCL managing director D Vasudeva Reddy; retired IAS officer and Jagan’s former secretary K Dhananjaya Reddy; and Jagan’s former officer on special duty (OSD) Pellakuru Krishna Mohan Reddy.
What is the AP liquor scam, and what is the money trail the police have found so far?
The AP liquor scam
Jagan came to power in 2019 with the promise of implementing liquor prohibition in a phased manner. Under a new liquor policy, his government took over nearly all the 3,500 liquor shops in the state. The liquor business was entirely handed over to the government-owned Andhra Pradesh State Beverages Corporation Limited (APSBCL).
APSBCL switched to cash transactions at all of its retail outlets, claiming that they were more transparent than digital transactions.
Slowly, popular liquor brands were replaced with new, unknown brands.
These moves were questioned by the Telugu Desam Party (TDP) and Jana Sena Party (JSP) who were in the Opposition at the time, alleging that the switch to cash transactions was done to divert funds for YSRCP’s election expenses.
After coming to power in 2024, the TDP-JSP-BJP coalition government ordered a probe into these allegations.
Now, the SIT has found that several bureaucrats, YSRCP leaders and their associates had misused the state’s monopoly in the liquor business to demand bribes from companies for placing supply orders, regardless of market demand. Distilleries were allegedly demanded to pay 20% of the base price of liquor in bribes.
Previously, the Excise Department had used automated software to place orders to liquor companies based on pre-decided formulae, without human intervention. This was replaced by manual systems so that orders would be placed to favour the companies forced to pay up bribes, according to the chargesheet.
Popular brands such as Seagram’s and McDowell's saw a big drop in sales, and were replaced by lesser known brands that received high orders. One such company – Adan – which received a high volume of orders, had allegedly floated by Raj’s relatives in 2020. They misused Raj’s political clout to get orders from APSBCL, according to the SIT.
Between 2019 and 2024, APSBCL made payments of nearly Rs 24,000 crore to 111 distilleries. The SIT says it decided to look closely at the 40 major distilleries believed to have paid most of the bribes. It has drawn up data of financial transactions from 16 of these companies to suggest that payments were made to jewellers, fake vendors, and shell companies: alleged guises for paying kickbacks to “political functionaries”.
Who benefited from these kickbacks?
The SIT alleges that the bribes collected through dubious transactions and collection agents were eventually handed over to Jagan’s former IT adviser Raj, who would pass the money on to three others: former YSRCP leader Vijaysai Reddy who was once a close aide of Jagan; YSRCP MP Midhun Reddy; and Balaji Govindappa, director of Bharathi Cements, which is owned by Jagan’s family.
“Balaji…would transfer it to former chief minister YS Jagan Mohan Reddy. On an average, Rs 50-60 crore was collected every month,” said the chargesheet.
“It is further revealed during investigation that the cash that was received in the form of kickbacks, was distributed to voters during the General Elections 2024 for the purpose of inducing the voters to vote for the YSRCP party,” it said. Of the total Rs 3,500 alleged bribes, Rs 200 to 300 crore were allegedly used for “unlawful election expenses”.
YSRCP leaders allegedly used official government vehicles to transport cash from Hyderabad to Andhra Pradesh, evading police checks.
Chevireddy Bhaskar Reddy, a senior YSRCP leader, is accused of helping Raj move Rs 250 to 300 crore in cash towards election expenses. Bhaskar Reddy is the former chairman of Tirupati Urban Development Authority (TUDA) and former Chandragiri MLA.
In 2024, when his son Chevireddy Mohit Reddy was the chairman of TUDA and contesting from Chandragiri on a YSRCP ticket, his official TUDA vehicle, a Toyota Fortuner, was allegedly used to transport cash from Hyderabad to Vijayawada and Tirupati. The chargesheet alleges that the gunmen of Bhaskar Reddy, who was an MLA at the time, and a driver employed by TUDA were also involved in this operation.
While toll data shows the Fortuner travelling to and from Hyderabad several times, TUDA’s vehicle logs did not mention that it had travelled to Hyderabad at all from November of 2023 to March 2024. “This shows clear manipulation of records to mask the transportation of cash using TUDA vehicle and the active role played by [Chevireddy Bhaskar Reddy and his son Mohit Reddy] in transporting cash received in the form of kickbacks from [Raj] to various places,” the chargesheet said.
Cash consignments were allegedly stored in multiple safe houses in Hyderabad and Tadepallu, and covertly transported using TUDA vehicles or private lorries in cartons, “bypassing checks using political influence”.
Raj and another accused Tukekula Eswar Kiran Kumar Reddy, who had established multiple startups in electric vehicles, pharmaceuticals, logistics, and other sectors, are also accused of using the kickbacks to fund research, operational costs, and salaries in these startups.
Raj and Kiran also allegedly bought luxury cars worth several crores using these proceeds of crime.
The SIT found that Raj had bought several real estate properties, including 92 acres of land, and also frequently travelled abroad with his team. The chargesheet said some of the accused had a lavish lifestyle allegedly funded by the kickbacks and disproportionate to their declared income.
“This unaccounted, high-value foreign travel expenditure is completely inconsistent with the income declared by the accused persons and clearly points to the use of laundered funds to maintain a lifestyle of conspicuous luxury, which was never reflected in their declared financial status before 2019,” the chargesheet said.
Raj is also accused of venturing into movie production to whitewash his earnings from the kickbacks.
Raj allegedly ran the film production company ED Entertainments, which produced the 2023 Telugu film Spy starring Nikhil Siddhartha.
While the budget of the movie was claimed to be around Rs 20 to 25 crore, the production company’s bank statements showed transactions worth only Rs 12 crore, according to the chargesheet.
“This establishes the fact that Raj Kessireddy has used the black money for producing movies to convert it into white, which he used for purchasing…properties in Machanapalle and Dhamarapalle,” the chargesheet alleged.