TASMAC Scam : How Tamil Nadu’s Liquor Monopoly Got Entangled in Corruption Case? | TDG Explainer

Tamil Nadu has a long history of liquor prohibition. The Indian National Congress government, led by C. Rajagopalachari, first introduced the Tamil Nadu Prohibition Act in 1937, partially banning liquor sales. However, in 1971, then-Chief Minister M. Karunanidhi became the first Dravidian leader to lift prohibition.

In 1983, M.G. Ramachandran (MGR) took a different approach by establishing the Tamil Nadu State Marketing Corporation Limited (TASMAC). This state-run body controlled liquor sales while generating revenue for the government. Two decades later, in 2003, Chief Minister J. Jayalalithaa strengthened this monopoly by amending the Tamil Nadu Prohibition Act. She made TASMAC the sole retail vendor of liquor, eliminating private sellers.

While TASMAC boosted state revenue, it also fueled alcohol consumption. Today, around 47% of Tamil Nadu’s urban and rural population consumes alcohol. Despite the state’s emphasis on education in the past—when K. Kamaraj opened over 4,000 schools—Tamil Nadu now has only 2,550 government schools, while successive Dravidian governments have permitted 6,800 liquor shops.

TASMAC’s Financial Boom and Corruption Allegations

Over the years, TASMAC has become a major revenue generator, bringing in nearly ₹45,000 crore annually. However, it has also faced allegations of mismanagement and corruption. The Enforcement Directorate (ED) recently exposed a large-scale scam, alleging that politicians, bureaucrats, and liquor manufacturers manipulated tenders, inflated costs, and siphoned off over ₹1,000 crore through fraudulent transactions.

How the Scam Unfolded

According to the ED, a well-organized network engaged in financial fraud within TASMAC. The agency uncovered several irregularities:

1. Fake Purchase Records & Inflated Costs: Liquor distilleries allegedly created bogus purchase records, inflating costs. Companies like Devi Bottles, Crystal Bottles, and GLR Holding reportedly used fake invoices to launder money.

2. Kickbacks for Inflated Liquor Supply Orders: Liquor manufacturers allegedly bribed TASMAC officials to secure inflated supply orders. The ED named distilleries such as SNJ, Kals, Accord, SAIFL, and Shiva Distillery as key players in the scam.

3. Tender Manipulation in Bar Licences & Transport Contracts: Authorities reportedly awarded bar licences to applicants without proper documentation. Transport contracts were also manipulated, with TASMAC paying ₹100 crore annually to transporters despite significant irregularities.

4. Unaccounted Cash Transactions & Money Laundering: A large portion of the illicit funds was converted into cash and funneled into political channels. Investigators found direct links between liquor manufacturers and senior TASMAC officials, suggesting a well-planned corruption scheme.

Political Fallout and Detentions

The scam has triggered a political storm in Tamil Nadu. Opposition parties, including the BJP and AIADMK, have accused the ruling DMK government of massive corruption.

BJP Tamil Nadu chief K. Annamalai alleged that state minister V. Senthil Balaji was the “kingpin” of the scam. “The TASMAC scam is even bigger than the Delhi liquor scam,” he claimed. Meanwhile, AIADMK leader Edappadi K. Palaniswami suggested that the actual fraud could be as high as ₹40,000 crore and demanded a high-level probe.

On Monday, BJP leader Tamilisai Soundararajan was detained while staging a protest against the TASMAC scam. She stated, “The ED has revealed ₹1,000 crore irregularities in TASMAC, and we have the right to protest.”

Yesterday, police also detained BJP state president K. Annamalai while he was protesting against the government’s alleged involvement in the scam. His arrest further intensified the political battle between the BJP and the DMK.

DMK’s Defense and Ongoing Investigation

Senthil Balaji and other DMK leaders have dismissed the allegations as politically motivated. “TASMAC operates transparently. There is no basis for the claim that there were ₹1,000 crore irregularities,” Balaji stated. The DMK has accused the central government of misusing agencies like the ED to defame the Tamil Nadu government.

Meanwhile, the ED has launched a large-scale probe, conducting raids at TASMAC headquarters, distilleries, and government offices. The agency has reportedly recovered documents detailing bribes, digital records of money laundering, and links between political leaders, bureaucrats, and liquor manufacturers. Officials expect more arrests as the investigation deepens.

What’s Next?

As the controversy grows, the TASMAC scam has become a key political issue ahead of the upcoming elections. With allegations flying from all sides, the investigation’s outcome could significantly impact Tamil Nadu’s political landscape. The coming weeks will likely bring more developments, exposing further details about the extent of corruption within the state-run liquor monopoly.