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Diageo ( DEO ), Sequoia Capital face influence-peddling probe

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Diageo ( DEO ) made payment to lift ban on duty-free items -agency

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Sequoia made payments for investment approval -agency

(Adds Chidamabaram statement to court in paragraphs 7-8)

By Arpan Chaturvedi

NEW DELHI, Jan 10 (Reuters) - India's federal

investigating agency has alleged that Diageo ( DEO ) and Sequoia

Capital made suspicious payments to a politician's firm in an

attempt to attain favourable government decisions, a document

reviewed by Reuters on Friday showed.

The Central Bureau of Investigation (CBI) alleges that

Diageo Scotland made a suspicious transfer to Congress Party

lawmaker Karti Chidambaram's firm after a 2005 ban on the sale

of its duty-free products hit Johnnie Walker whisky sales.

The agency said in the case document on its website that an

investigation showed a payment of $15,000 to Chidambaram's firm

was intended to influence public servants to lift the ban,

rather than for consultancy work as it was described.

"In order to lift the ban, Diageo Scotland approached Karti

P Chidambaram," the agency said in the document, which is part

of its formal case registered against Diageo ( DEO ) and Sequoia, after

an investigation launched in 2018 into investment approvals.

It did not say when the alleged payment by Diageo ( DEO ) was made.

A spokesperson for Diageo's ( DEO ) India unit, United Spirits, in

which the British drinks giant owns a stake of about 56%,

declined to comment. Diageo ( DEO ) did not immediately respond to a

request for comment on the allegation.

U.S. venture capital group Sequoia did not immediately

respond to a request for comment.

Chidambaram, who is a member of India's lower house of

parliament, filed an application before a New Delhi court on

Friday denying the CBI allegations and said he was "neither a

shareholder nor Director" of the firm in question.

The case "is mala fide and is borne out of political

vendetta," his court filing said.

Reuters was unable to contact Chidambaram, who is the son of

former finance minister P Chidambaram and a lower house member

of parliament representing India's main opposition party.

The CBI said Diageo ( DEO ) suffered a huge loss from the 2005

embargo on its products by the India Tourism Development Corp, a

firm majority-owned by the government that had a monopoly on

sales of imported duty-free liquor.

The case presents a new challenge for Diageo ( DEO ) after

anti-graft police launched an investigation last year into

billing and discount practices in the capital, New Delhi.

The company has said it is cooperating with that agency.

Separately, the CBI case document alleges the Mauritius unit

of Sequoia Capital made suspicious transactions with the firm of

Chidambaram, who was in a position to influence public servants

to secure approval for an Indian investment in 2008.

Sequoia's proposal, the CBI said, was approved in November

by P Chidambaram, who was finance minister at the time. In

response to a text message from Reuters, P Chidambaram, also a

Congress party politician, said he had no comment.

The CBI document does not name the former finance minister

as one of those accused.

A detailed investigation will look for any violations of

India's criminal law, including its anti-graft law that sets

penalties for bribes to public servants, the CBI said.

Punishments can involve jail terms of up to seven years, and

unspecified fines.