Updated: March 4, 2021 7:03:37 am
The Enforcement Directorate (ED) has registered a case against top executives of the Kerala Infrastructure Investment Fund Board (KIIFB), the state government’s flagship entity for mobilising funds for infrastructure projects, in connection with alleged violations of the Foreign Exchange Management Act (FEMA).
ED sources said a case has been registered and notices have been served to KIIFB CEO Dr K M Abraham, a former chief secretary of the state, and KIIFB deputy managing director Vikramjit Singh, a serving IPS officer of the Kerala cadre.
“The issue is related to FEMA violations in connection with KIIFB raising Rs 2,150 crore masala bonds listed on the London Stock Exchange. Prima facie, there are violations of FEMA,” an ED official said.
No decision has been taken yet on recording the statement of the state Finance Minister Thomas Isaac, who is vice-chairman of KIIFB, the official said. “That (questioning Isaac) would happen only in the next stage. If the officials own up to the responsibility of mobilising overseas funds in violation of FEMA, the issue would stop with them. Otherwise, we would proceed to question the minister,’’ ED officials said.
Chief Minister Pinarayi Vijayan is the chairman of KIIFB, a body that was set up in 1999 through an Act of the Assembly. KIIFB CEO Abraham, a 1982-batch IAS officer, had been a whole-time member of SEBI from 2008 to 2011. During his tenure at SEBI, Abraham had exposed financial irregularities at the Sahara group.
Isaac described the ED action as a “conspiracy” of the BJP, and named a particular official of the agency who he alleged was acting at the behest of the party.
“This is the political conspiracy of the BJP to destroy the development of the state. The ED guy (in Kochi) Manish Godara is the son of BJP leader Harisingh Godara from Rajasthan. He has led raids in many states, including Congress-ruled states, for the BJP with a political motive,’’ Isaac said.
The minister alleged the ED case was linked to the forthcoming Assembly elections in Kerala. “In Kerala, officials are performing as per the directions of the ministers. The government knows how to protect the officials. ED should not resort to threatening the officials in the manner they have done in Congress-ruled North Indian states. We are not going to back away out of fear,’’ he said.
The ED action against the KIIFB officials has followed Union Finance Minister Nirmala Sitharaman’s statements against the KIIFB, Isaac said. “ED is under the Union Finance Ministry. Soon after she (Sitharaman) left Kerala, ED issued summons to KIIFB officials… The agenda is very clear, they want to strangle KIIFB.’’
At an election event organised by the Kerala BJP last week, Sitharaman had said: “I don’t know what budget-making this is when all the money is given to one KIIFB. What is this organisation? We also make a budget in the Union government. We don’t give all money to one particular agency and say, ‘we’ll see’.”
Sitharaman said that the KIIFB’s working had been criticised by the Comptroller and Auditor General (CAG) of India as well.
“The CAG has commented and criticised… Total questionable operation. If this is budget-making, no wonder Kerala is going into a debt trap. And this is a questionable affair. Corruption,” she said.
The CAG’s report on Kerala’s finances for 2018-19, tabled in the Assembly on January 18 this year, had said that the KIIFB’s off-budget borrowings were unconstitutional. On 23 January, the Kerala Assembly passed a resolution against the CAG’s report.
Chief Minister Pinarayi Vijayan on Wednesday wrote to the Chief Election Commissioner, saying the Model Code of Conduct “is being torpedoed at the instance of some union ministers”. Soon after Finance Minister Sitharaman attacked the functioning of the KIIFB, the ED had summoned some officials, the CM said.
The ED’s power to summon a witness is intended to gather information and evidence relevant for inquiry and investigation, Vijayan said – however, “Here, it is being misused for media propaganda during the time of the election campaign. The aim is to create a smear campaign against officials and the state government. The very purpose of public trust deposed on officials is being betrayed due to the action of the Union Finance Minister.’’
Opposition leader Ramesh Chennithala said: “The case by ED after the election was announced, is suspicious. In 2019 itself, Opposition had raised in the Assembly that masala bonds were unconstitutional. What was the central agency doing so far? This case is pre-planned… part of the CPM-BJP political understanding.”
ED sources said the agency’s investigations had found that KIIFB had earned over Rs 2,100 crore through the issuance of bonds for infrastructure projects, but the money was used by cultural, forestry, fisheries and tourism departments.
Sources said preliminary investigations had also shown that the bonds were issued without the permission of the Centre, which is in violation of rules, as foreign debt cannot be raised without the Union government’s nod.
Besides Abraham and Singh, ED has also summoned two Axis bank executive directors for questioning in connection with the case. While Singh will appear before ED on Thursday, CEO Abraham has been called in on Friday.
Axis Bank Group executive directors Neeraj Gambhir (Treasury) and Ganesh Shankaran (Wholesale Banking) have been summoned as they were responsible for the financial affairs of KIIFB in the issuance of the bonds, ED sources said.
On the ED’s allegations about violations of FEMA, Isaac said that any corporate entity in the country could take offshore loans. “As per FEMA, any corporate entity can take a loan as per RBI guidelines. Every month, KIIFB is sending reports to RBI. What is the violation? It is KIIFB that is taking the loan, not the Kerala government,” he said.
With Deeptiman Tiwary, New Delhi
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