A dark blend for systemic corruption

The Congress-led government in Karnataka, already grappling with several controversies, now faces a new challenge. The Karnataka Wine Merchants’ Association has demanded the resignation of Excise Minister R B Timmapur, accusing him of serious corruption. The minister, however, has vehemently denied the charges. At the core of these allegations are three major issues – widespread corruption in officer transfers, the hafta (bribe) extracted from bars, pubs, and wine shop owners, and illegal payments made during the annual licence renewal process.

Opposition leader R Ashoka claims the irregularities within the Excise Department could amount to Rs 900 crore. While this figure may seem inflated, the truth is that corruption has long plagued the department, transcending party lines with every government contributing to the problem. Despite the department generating over Rs 38,000 crore annually in duties, its reputation has been severely damaged by systemic corruption.

One of the key grievances of the merchants’ association is the alleged collection of Rs 16 crore in bribes for the transfer of excise officers. Corruption in transfers has a long history in Karnataka, with politicians, particularly MLAs, using their influence to procure lucrative postings for officers. The practice dates back to the 1980s, when then-Chief Minister Ramakrishna Hegde formalised transfers through letters of recommendation from local legislators. Over the years, this has evolved into a full-fledged racket where transfers and postings come at a hefty price.

Why, one might ask, is the liquor industry perturbed about this practice when officers themselves pay large sums to secure profitable postings? The answer lies in the officers’ desire to recover their ‘investment’ during their tenure, often by extracting bribes from the industry. This vicious cycle ultimately squeezes the profits of business owners and some of these costs are passed on to the consumers.

To address this, the government should introduce counselling-based transfers as implemented in the education and health departments. This would minimise the undue influence of politicians in the transfer process. Additionally, making the act of obtaining a recommendation letter for officer transfers a punishable offence would be a critical step towards curbing this long-standing practice.

Another issue haunting the liquor trade is the monthly hafta paid to excise and police officers. These officers wield significant power over the industry, with the ability to shut down businesses or impose fines, often with little regard for the law. They routinely expect bribes in exchange for favourable treatment. This culture of corruption extends to local elected representatives who, too, must be ‘taken care of’ by the industry.

The annual licence renewal process has become another major point of contention. Despite the government’s efforts to digitise and streamline the process, officers continue to demand bribes, undermining the very system meant to eliminate human interference.

Additionally, the state’s moratorium on granting new CL-9 licences for bars, pubs, and wine shops has fuelled a flourishing black market where existing licences are sold for exorbitant prices. The transfer of these licences from one owner to a new one often involves crores of rupees including bribes, while the state receives a fraction of this amount as fees. Successive governments have justified this unofficial ban on new licences, as a measure of ‘social responsibility’. However, the underlying reality is that this artificially created scarcity of licences has led to inflated prices, benefiting politicians and bureaucrats, at the government’s expense.

Reform for regulation

In light of these issues, Karnataka could draw inspiration from Andhra Pradesh’s new liquor policy which focuses on increasing revenue and transparency. Notable measures include the auctioning of liquor shop licences and the establishment of liquor malls, similar to the Haryana model, which aims to improve customer access to premium brands by dismantling illegal supply chains. While this system too has its loopholes, it has significantly boosted legal trade and revenue generation.

That said, the liquor industry itself must shoulder some of the blame for the current state of affairs. It is their greed that has led to the present situation. They are often guilty of violating laws, operating without proper documentation, staying open beyond permissible hours, and other illegal practices. Such actions have fostered an atmosphere where officers feel emboldened to demand bribes in exchange for overlooking these infractions. A higher degree of self-regulation within the industry is essential to combat corruption in the department.

The excise lobby in Karnataka used to wield enough power to shake the very foundations of the government. Much of the credit for dismantling this lobby goes to Chief Minister Siddaramaiah, who, during his previous tenures as finance minister, made significant efforts to clean up the industry, especially

by cracking down on the sale of ‘seconds’ liquor, and enhancing organisational efficiency.

It is, therefore, ironic that corruption charges are surfacing under his watch. The Excise Department is one of the government’s largest revenue-generating arms and it is necessary that it operates at the highest level of integrity and accountability. The allegations of corruption cannot be dismissed as ‘business as usual’. The government must take these charges seriously and conduct a thorough, impartial investigation. This should not be a superficial inquiry aimed at silencing opposition voices but a genuine effort to clean up the system and establish robust governance policies.

When the Congress was in opposition, it had demanded an independent investigation into similar allegations against the previous BJP government, particularly the claim that the Bommai administration had extracted 40% commission from contractors. If Siddaramaiah is to uphold the integrity of his party and government, he must hold himself to the same standard, and order an impartial inquiry into these serious charges of corruption.

If the Chief Minister truly seeks to restore public faith in his government, this is the moment for him to act decisively. An inquiry alone will not suffice; it must be coupled with meaningful reform that has a long-term impact. Only then can the Excise Department begin to serve the people, rather than a select few with vested interests.

(The writer is a senior journalist and certified independent director)