ED Arrested Aurobindo Pharma's Director. 5 Days Later, It Bought Electoral Bonds

Sarath Reddy, director of Aurobindo Pharma was arrested by ED on 10 November. The company bought bonds on 15th.

Aurobindo Pharma's director Sarath Reddy was arrested by ED on 10th November 2022.

(Aroop Mishra/ The Quint) 

On 10 November 2022, the Enforcement Directorate (ED) arrested P Sarath Chandra Reddy, the director of Aurobindo Pharma, in connection with its money laundering case into alleged irregularities in the Delhi government’s liquor policy. Five days later, on 15 November, Aurobindo Pharma donated electoral bonds worth Rs 5 crore.

Then, in May 2023, the Delhi High Court granted bail to Reddy on medical grounds. A month later, in June 2023, the ED moved a plea before the court to pardon Reddy, and for him to be made an ‘approver’ in the case— meaning that he would voluntarily disclose all the irregularities in the policy. The Rouse Avenue court accepted the plea. Aurobindo Pharma then made another set of donations—worth Rs 25 Crore—in November 2023, five months after becoming an approver in the ED case.

This is the timeline that has emerged on a close study of the State Bank of India (SBI) electoral bonds data released by the Election Commission of India (ECI) on Thursday.

Delhi Liquor Scam Allegations Against Aurobindo Pharma

Aurobindo Pharma is a Hyderabad-based pharmaceutical giant, which was founded back in 1986. The company’s name surfaced in connection with the alleged Delhi liquor policy scam, where members of the Delhi government stand as the primary accused.

The Aam Aadmi Party (AAP)-Delhi government had implemented a liquor policy In November 2021, but scrapped it at the end of September 2022 amid allegations of corruption. According to the ED, Reddy was a part of the "South Group" that had allegedly paid Rs 100 crore to the AAP, which was used to fund its Goa elections. The ED had told the court that Reddy was “one of the kingpins” and a “major beneficiary of the cartelisation” whose cartel group “controlled 30 percent of Delhi's liquor market”. Delhi Deputy Chief Minister Manish Sisodia is one of the primary accused in the case, and has been in jail since February 2023.

Sarath Reddy is the son of P V Ram Prasad Reddy, who had founded the Aurobindo Pharma, and is also the son-in-law of co-founder and managing director K Nityananda Reddy. Aurobindo Pharma is seen as a major player in the generic drugs market with a consolidated turnover of Rs 23,455 crore in 2021-22. Sarath Reddy’s arrest was also of political significance, given his indirect association with the YSR Congress Party. Sarath’s brother is married to YSRCP MP Vijay Sai Reddy’s daughter. Vijay Sai Reddy is seen as a close aide of Andhra Pradesh CM YS Jagan Mohan Reddy.

After Sarath Reddy’s arrest in November 2022, Aurobindo Pharma released a statement saying, "The company has learnt that the arrest of Sarath Chandra is not in any way connected with the operations of Aurobindo Pharma Limited or its subsidiaries." According to Financial Express, after Sarath's arrest, Aurobindo Pharma's shares plunged by 11.69 per cent. However, that didn't stop the company from donating electoral bonds worth Rs 5 crore just five days after Reddy's arrest.
 
After Reddy was made approver by ED, the agency said that he would voluntarily disclose all the irregularities in making and implementing the liquor policy in Delhi. 

Aurobindo Pharma donated a total of Rs 52 crore between April 2021 and November 2023. The biggest installment came in November 2023 (of Rs 25 crore), five months after becoming an approver in the ED case. 

The Quint has written an email to Aurobindo Pharma seeking a response. The report will be updated if and when there is a response.