Pernod Ricard Denies Allegations Of Indian Law Violation Despite Internal Probe Findings
The ED accused Pernod Ricard India in January 2023 of money laundering, alleging the company facilitated $24 million in corporate guarantees to assist retailers with license bids
An internal investigation commissioned by French alcohol giant Pernod Ricard has revealed that top executives at its Indian subsidiary breached laws by conspiring with alcohol retailers in New Delhi, according to a report reviewed by Reuters. The findings contradict public denials of any wrongdoing made by the company and its representatives in court.
Regulatory Allegations and Financial Crimes Probe
The Enforcement Directorate (ED) accused Pernod Ricard India (PRI) in January 2023 of money laundering, alleging the company facilitated $24 million in corporate guarantees to assist retailers with license bids. In return, these retailers were expected to stock more Pernod products.
The allegations stem from PRI’s lobbying for a 2021 law that allowed private players to operate liquor stores — a significant shift from government-controlled retail. Although the law was reversed later, the ED continues to pursue charges, maintaining the issue as a major regulatory hurdle for Pernod in India, one of its largest markets by sales volume.
Findings of the Internal Probe
The May 2023 draft report by law firm Shardul Amarchand Mangaldas, which was hired to conduct the investigation, found three senior executives, including then-COO Rajesh Mishra, in violation of Delhi’s Excise Policy. The policy prohibits manufacturers from investing in retail operations.
The report highlighted internal communications and WhatsApp messages suggesting corporate guarantees were used to exert control over market share through retail partnerships. It noted that the executives' actions pointed to a "larger conspiracy" involving other industry players and warned of potential legal implications for Pernod Ricard.
Notably, the report also stated that Mishra provided "factually inaccurate" information to federal investigators.
Company Responses and Ongoing Impact
PRI has denied any wrongdoing, stating it has "always collaborated with respective authorities" and expressing confidence in the judicial process. However, the company declined to comment on actions taken following the internal investigation.
The Enforcement Directorate and Mishra have not responded to media inquiries, and a Pernod spokesperson in Paris also declined to comment. The internal report recommended either the termination or resignation of Mishra, citing his involvement in approving financial assistance to retailers. Mishra has since moved to a senior position in Pernod Ricard’s Malaysian operations.
Business and Financial Consequences
The ED’s actions have led to a ban on the sale of PRI brands in New Delhi, a vital market for the company. The restrictions are under appeal. Meanwhile, PRI’s auditor, KPMG India affiliate BSR & Co, has requested an estimate of the regulatory impact, which the company pegged at $67 million in civil liability.
Despite these challenges, PRI reported $189 million in profits on $3.2 billion in revenue for its latest fiscal year. India's Prevention of Money Laundering Act imposes penalties, including fines and imprisonment of three to seven years, for those found guilty. The case remains one of the most significant regulatory risks for Pernod Ricard in India.
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