Pernod Ricard violated an alcohol policy in the Indian capital New Delhi by financially supporting distributors who, in exchange, stocked more of the French spirits group's products, thereby increasing its market share, according to the country's financial crime agency.

According to court documents from November, the Enforcement Directorate, an Indian judicial body, said Pernod Ricard India had provided corporate guarantees worth two billion rupees (22.6 million euros) in 2021 to its banker HSBC.

It had then asked the bank to facilitate loans to distributors, who used the funds to obtain licenses for liquor stores in New Delhi.

New Delhi government policy prohibits spirits groups from participating in the distribution of their products, either directly or indirectly. According to the documents examined by Reuters, the French group found itself "in contravention" of this rule, as it actually used bank guarantees to invest in a distribution network.

The documents are not public, and details of the allegations against Pernod Ricard have not previously been published.

The Pernod Ricard India group, which has strongly denied the allegations, says it "will continue to cooperate fully with the Indian authorities in this matter."

The head of international brands for Pernod Ricard India, Benoy Babu, was arrested in November and taken into custody in connection with the case. He is charged with money laundering under Indian law and violating New Delhi's alcohol policy.

Benoy Babu, who denies the charges, has not been charged and is seeking bail. A New Delhi court will consider his application on January 19.

(Arpan Chaturvedi and Aditya Kalra report from New Delhi, Dina Kartit, edited by Blandine Hénault)