Across Tamil Nadu, the yellow-and-black signage of the Tamil Nadu State Marketing Corporation (TASMAC) is as ubiquitous as the heat. This state-run behemoth, with its ironclad monopoly over 5,380 retail shops and 3,240 bars, is a major engine of the state's revenue. But behind the clinking of glasses and the steady hum of commerce, the ledger was bleeding. For years, the government celebrated record-breaking retail sales, yet a chilling paradox emerged: while the public drank more than ever, revenue from the state's bars was in free fall.
The Directorate of Vigilance and Anti-Corruption (DVAC) on Wednesday conducted searches at around 41 locations linked to former DMK minister V. Senthil Balaji and his alleged associates. The raids began at 7 a.m. at Balaji's residence in Rameshwarapatti, in Karur district, at the homes of several of his associates and former aides, and at the TASMAC district office in Karur. Simultaneous searches were also carried out in Karur, the Nilgiris, Coimbatore, Tiruppur, Erode, Chennai, and several other locations. The DVAC has filed a First Information Report (FIR), supported by 145 pages of documentary evidence, before the Principal Judge of the City Civil and Sessions Court in Chennai, formally initiating proceedings against Senthil Balaji and six others. According to the agency, the accused allegedly operated as a syndicate.
The FIR marks a shift from a routine investigation to what appears to be a broader probe into an alleged institutionalised corruption network within TASMAC. According to the FIR, the evidence points to the systematic subversion of the state's liquor monopoly, with regulatory oversight allegedly bypassed to benefit an organised syndicate. By focusing on the structural mechanisms of procurement and licensing, rather than isolated instances of bribery, the DVAC's investigation appears to target the alleged architecture of revenue leakage within the state-run liquor distribution system.
While the prime accused named in the FIR is Senthil Balaji, the probe focuses on an alleged years-long system of manipulation spanning from 2021 to 2025. This transition from examining a single transaction to investigating a wider network has profoundly impacted the political landscape, with the alleged activities being viewed not as isolated lapses but as part of a broader misuse of state machinery for private gain. The FIR has pulled back the curtain on a parasitic organised crime syndicate. The FIR further alleges a nexus between political operatives and private brokers who not only caused financial losses to the government but also undermined institutional processes.
The revenue paradox - more sales means less profit
The FIR alleges a “drastic increase” in retail liquor sales alongside a “drastic decrease” in bar revenue—a mathematical impossibility in a healthy market. According to the FIR, this was not merely the result of shifting consumer habits but was allegedly linked to the operation of “ghost bars”. In a sweep across six major industrial and tourism hubs—Coimbatore, the Nilgiris, Tiruppur, Erode, Namakkal, and Karur—investigators found what they described as a collapse of regional oversight. Of the 857 bars that were officially tendered, 284 were marked as “closed” on paper while allegedly continuing to operate on the ground. These establishments reportedly continued serving customers without renewing their licences or submitting the mandatory monthly demand drafts to the treasury. The financial impact, as outlined in the FIR on the alleged TASMAC liquor sales irregularities, is immense. In a minimum estimate covering just three of these regions during the 2022–2023 period, the alleged revenue loss was calculated at ₹17.27 crore in Coimbatore North, ₹13.58 crore in Coimbatore South, and ₹1.95 crore in the Nilgiris.
Totalling over ₹32 crore in these three districts alone, the fraud suggests a systemic rot where TASMAC district managers allegedly acted as enablers for the syndicate. As the FIR notes - “the district managers of TASMAC violated and breached the tender rules. They colluded with the bar owners and did not follow the rules, which resulted in revenue loss to the government.”
The shadow MD of TASMAC - A private individual who ran the state monopoly
The most significant revelation in the DVAC investigation is the alleged subversion of the IAS hierarchy. The case files identify Rathesh Raj Shanmugavel (A-6), a private individual and close associate of former minister Senthil Balaji (A-1), as the syndicate’s alleged “unauthorised power broker.” Despite holding no government position, Shanmugavel allegedly operated as a “shadow MD,” exerting “direct and undue influence” over the actual Managing Director, S. Visakan, IAS (A-2). The investigation describes an environment in which an IAS officer allegedly followed “informal yet authoritative” directions from a private individual. The FIR alleges that this shadow governance influenced key decisions, including the approval of major liquor brands for state-wide sale, the selective manipulation of bar licence tenders, and the administrative transfers of high-ranking officials, including District Revenue Officer (DRO)-level officers, to ensure that the syndicate’s operations remained unobstructed.
The EMD paper trail and the tenders for sale
The “Karur gang”, as alleged in the FIR, maintained its grip on the system by rigging the technical mechanisms of government procurement—specificalThe “Karur Gang”, as alleged in the FIR, maintained its control over the system by manipulating the technical aspects of government procurement, particularly the Earnest Money Deposits (EMDs). In what the FIR describes as a case of cartelisation, bank records allegedly revealed Demand Drafts with consecutive serial numbers issued from the same bank branches, suggesting that the bidding process may not have reflected genuine competition. A key example cited in the FIR is the case of P. Ravichandran (M/s Sun Transports), who applied for 16 TASMAC depots. He submitted 16 DDs worth ₹50,000 each. Although he was allotted only one depot, the remaining 15 DDs were allegedly not returned. Instead, they were allegedly “misused” by the senior regional manager to benefit a select group of transport firms. According to the FIR, the alleged scheme effectively blocked legitimate competition for transport contracts valued at ₹100 crore annually. The firms named in connection with the alleged DD-swapping scheme include M/s S.S. Transport, Speed Parcel Service, A1 Travels, Sri Venkateshwara Logistics, Suryaa Cargo Mover, and TARANA Logistics Pvt Ltd.
The “Karur gang” and the “Z” person strategy
To conceal the identities of the original owners of the liquor bars, the syndicate allegedly employed a sophisticated “X, Y, Z” money-laundering scheme. Under this arrangement, cash was allegedly deposited into the account of a front person (“X”) to obtain a DD. The DD was then used by a second individual (“Y”) to apply for the tender, but once the licence was granted, the bar was allegedly operated by a third party (“Z”)—the actual syndicate member. The human scale of this fraud is best seen in Sivagangai district, where a single individual, acting on the directions of Mulanoor Karthik, accused number 7 in the case, allegedly obtained 42 DDs worth ₹25 lakh despite not applying for a single tender in the district. This was allegedly accompanied by a large-scale “kickback cycle” involving used bottle suppliers. According to the FIR, these suppliers generated bogus or inflated invoices for distilleries to create a pool of unaccounted cash. After retaining a commission, they allegedly routed the money back to the distilleries, which then used the funds to bribe TASMAC officials for supply orders. The scale of the alleged kickbacks is significant: the FIR states that M/s SNJ Groups allegedly received ₹108 crore through crystal bottle transactions, while M/s Southern Agrifurane Industries (SAFL) allegedly received more than ₹35 crore through similar inflated invoicing.
The invisible tax and the organised overcharging at the counter
While the Karur Gang manipulated high-value tenders worth hundreds of crores, they also picked the pockets of every citizen who walked into a TASMAC shop. Between 2021 and 2025, an “organised” mechanism was allegedly implemented at the retail level, forcing consumers to pay an unauthorised premium that bypassed the government exchequer. According to the allegations, regular liquor brands were sold at prices ranging from ₹10 to ₹100 above the Maximum Retail Price (MRP) per bottle, while foreign liquor brands were allegedly sold at premiums of up to ₹500 above the MRP.
This represented a direct, illegal tax on the public to fund the syndicate’s operations. The FIR by the DVAC characterises this as a “criminal conspiracy... to launder huge illicit money in TASMAC by various means of manipulation and favouritism... for deriving undue advantage and causing serious loss to the government exchequer.”
While the decision to charge a former minister and senior IAS officers under two different legal regimes—the Indian Penal Code (IPC) and the Bharatiya Nyaya Sanhita (BNS)—highlights the gravity and temporal scope of the case, political considerations have also been raised around the investigation. Balaji had emerged as a key target after the new TVK administration took charge. He had previously faced an investigation in the MLA bribery case.
