Pernod Ricard India executives violated laws in New Delhi liquor retail, internal probe reveals
INDIA – An internal investigation commissioned by global beverage giant Pernod Ricard has found that senior executives at its India division violated local laws by collaborating with alcohol retailers in New Delhi.
This revelation comes as the company continues to deny allegations of wrongdoing in court and public statements, according to a report reviewed by Reuters.
The probe, conducted by Indian law firm Shardul Amarchand Mangaldas, concluded that three executives, including then-Chief Operating Officer Rajesh Mishra, breached the Delhi Excise Policy (DEP), which prohibits alcohol manufacturers from investing in retail operations.
The findings, outlined in a May 2023 draft report, suggest that Pernod Ricard India (PRI) used US$24 million in corporate guarantees to assist retailers in securing licenses, allegedly in exchange for preferential stocking of its brands.
“There are conversations indicating that CG (corporate guarantee) was a means to have control over market share through retail control,” the report stated.
It also highlighted a “larger conspiracy” involving PRI executives and other industry players, potentially complicating the company’s legal challenges.
The allegations stem from an ongoing investigation by India’s Enforcement Directorate, which accused PRI of money laundering in January 2023.
While the company has denied any wrongdoing, the probe has resulted in a ban on the sale of Pernod Ricard brands in New Delhi, a key market for the company’s products, including Absolut Vodka and Beefeater Gin.
The 66-page report also criticized Mishra for providing “factually inaccurate” information to federal agents. It recommended his dismissal or resignation but advised against an acrimonious exit due to potential implications for ongoing legal proceedings.
India’s Prevention of Money Laundering Act imposes severe penalties, including fines and imprisonment ranging from three to seven years, for those found guilty.
Pernod Ricard India responded to Reuters, stating it “denies any wrongdoing by PRI or any of its executives” and expressed confidence in the judicial process. However, the company declined to elaborate on actions taken following the law firm’s findings.
The controversy is a significant setback for Pernod Ricard, as India is its largest market by volume, according to Euromonitor.
The company is currently appealing the ban on its products in New Delhi while estimating a potential civil liability of US$67 million.
The 2021 Delhi Excise Policy, which permitted private liquor retailers, was reversed last year, reinstating government-operated stores.
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