India’s Central Bureau of Investigation (CBI) has launched a fresh probe into allegations of illicit payments by global liquor giant Diageo and venture capital firm Sequoia Capital. Both companies are accused of funneling questionable funds to the firm of Karti Chidambaram, the son of former finance minister P. Chidambaram, in hopes of securing favorable government decisions.
The CBI’s investigation reveals that Diageo made a $15,000 payment to Karti Chidambaram’s firm following a 2005 ban on the sale of its duty-free products, which impacted the sales of its flagship Johnnie Walker whisky in India. The agency suggests the payment was intended to influence public servants to lift the embargo on Diageo’s products, rather than for any legitimate consultancy services as claimed by the company.
The case dates back to 2018 when the CBI began investigating approvals for investments. The 2005 ban was imposed by the India Tourism Development Corp, which held a monopoly on the sale of imported duty-free liquor. The payment from Diageo, as detailed by the CBI, was allegedly designed to sway public officials in favor of reversing the ban.
Additionally, the CBI documents include allegations of Sequoia Capital’s involvement in suspicious transactions with Karti Chidambaram’s firm. The venture capital firm, with a presence in Mauritius, is accused of seeking approvals for an Indian investment in 2008, which was granted by Karti’s father, P. Chidambaram, who was serving as finance minister at the time.
While the CBI’s case focuses on the corporate entities, it stops short of naming P. Chidambaram as a direct party to the investigation. Both Diageo and Sequoia Capital have yet to issue formal statements addressing the charges.
The CBI’s investigation will delve deeper into potential breaches of India’s criminal law, including its anti-corruption regulations. Convictions under these laws could result in prison sentences of up to seven years, as well as significant financial penalties.
