The Comptroller and Auditor General (CAG) has raised questions about British brewer Diageo’s quality control measures regarding liquor distributed in Delhi by the company.
A report dated February 25 published on CAG’s website has pointed out that Diageo conducted quality control tests at an unaccredited lab that it owns, called United Spirits Technical Centre.
The lab did not meet Bureau of Indian Standards (BIS) norms and was not accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL), the CAG report said. The food safety norms in India make it mandatory for brewers and liquor manufacturers to get quality tests done as per BIS standards at a NABL accredited lab.
"But the test results submitted by some of the licensees were not from National Accreditation Board for Testing and Calibration Laboratories (NABL) Accredited Lab as per the requirement of Food Safety and Standards Authority of India (FSSAI) Act." said the CAG report.
“Delhi Excise Requirements do not require report of NABL accredited laboratory but a chemical analysis report from either a government approved laboratory or from a private lab of repute. Additionally, Diageo India also ensures that its products are tested at the relevant accredited labs in accordance with the FSSAI and excise law requirements.” a Diageo spokesperson said.
While there were no specific observations about any other liquor brands, CAG named the distributors of Heineken and Pernod Ricard along with Diageo’s distributors for flouting the rules. Indospirit and Brindco were the distributors named in the report, and both entities sold liquor produced by all three companies named in the report.
A report by Economic Times dated August 18 said, Diageo's Indian unit has submitted financial documents sought by New Delhi anti-corruption police in an investigation related to billing and discount practices in supply of liquor in Delhi. The report further added executives of Diageo were summoned to appear before New Delhi police on July 26,2024 in the case that relates to company's supply of liquor to government agencies running alcohol shops and payments received from the city between 2017 and 2020.
The CAG report has largely dwelt into the role of excise department and distributors in the scam, but it made a pointed observation about Diageo’s quality testing.
On Diageo’s testing lab, CAG said United Spirits Technical Centre was not NABL accredited, and was a related party to United Spirits.
An email sent to Diageo remained unanswered, and Moneycontrol could not ascertain if Diageo had used its in-house testing lab just in Delhi, or if it adopts similar practices in other states too.
The report also dwelt into other allegations, including how Delhi excise department had issued licenses to sellers having common directors, and that there was a lack of transparency in pricing of Indian Made Foreign Liquor (IMFL). The report also highlighted how there was poor regulatory and executive functioning regarding liquor policy. Several leaders of the Aam Aadmi Party (AAP) have been accused of receiving kickbacks from liquor companies for easier regulation in Delhi between 2017-2020.
Quality control labs test for various aspects including water quality, presence of harmful ingredients and heavy metals along with presence of methyl alcohol.
The CAG report comes at a time when Diageo is undergoing a transition of leadership. On January 13, United Spirits Limited (Diageo India) announced its current Chief Executive Officer (CEO) Hina Nagarajan will transition into another position on Diageo’s Global Executive Committee and Praveen Someshwar who is currently with HT Media will replace her.
The Delhi Police had initiated a probe into the matter in 2024 and had summoned the CEO of Diageo - Hina Nagarajan - for questioning in July 2024, as per several media reports. The probe pertains to discounting provided by the British multi-national between the period of 2017-2020, according to a Reuters news report dated July 26,2024. While Diageo did not deny the existence of probe, it had denied Nagarajan receiving any summons from the police. The company said it was cooperating with authorities and called the probe a routine compliance exercise.
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