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Diageo accused of influencing policy through ‘suspicious payments’

The series of wrangles between Indian authorities and international drinks companies has broadened with allegations that Diageo made payments to a politician’s company in a bid to influence government decisions.

Reuters reports that India’s Central Bureau of Investigation alleges that in 2005 Diageo Scotland made a suspicious transfer to the company of Congress Party’s Karti Chidambaram when a ban on the sale of its duty-free products hit whisky sales.

A CBI document is said to allege that a payment of US$15,000 to Chidambaram’s firm was intended to influence public servants to lift the ban rather than for consultancy work.

The CBI said Diageo suffered a huge loss from the 2005 embargo on its products by the India Tourism Development Corporation, a firm majority-owned by the government that had a monopoly on sales of imported duty-free liquor.

Diageo has declined to comment on the charge.

Political backlash

Chidambaram, who is a member of India’s lower house of parliament, has filed an application before a New Delhi court 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.

This latest allegation follows a series against international drinks firms, notably Pernod Ricard.

Pernod Ricard faces antitrust probes

Only last week it came to light that Pernod Ricard is facing allegations of antitrust activities in Telangana state.

The CBI allegedly has found that Pernod colluded with local retailers to promote its whiskies to the detriment of local rival Radico Khaitan.

This follows an ongoing investigation in the Delhi region where the authorities have withheld renewing the Franch giant’s trading licence until a court case alleging illegal payments to retailers is resolved. 

Diageo and other global groups have also been asked for documents about their trading practices in the Delhi region earlier this decade.

All the groups deny engaging in any illegal activity.

Pernod Ricard is also challenging a $250m excise fine for allegedly undervaluing bulk imports to India.

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