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Tuesday, April 20, 2021

ED case could be turning point in polls, says Isaac

The ED has registered a case against top executives of the 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).

Written by Liz Mathew | New Delhi |
Updated: March 5, 2021 5:57:50 am
Thomas IsaacKerala Finance Minister TM Thomas Isaac (file photo)

The Enforcement Directorate (ED)’s case against top executives of the Kerala Infrastructure Investment Fund Board (KIIFB) could be the “turning point” in the upcoming Assembly election, according to state Finance Minister Thomas Isaac.

“We are going to take this seriously, we are going to point out that the Centre is trying to interrupt Kerala’s development. It’s going to be our main election issue. We are not shying away from giving an aggressive response to this move,” he told The Indian Express.

“This move by the BJP and the ED could be the turning point in this election,” he added.

The ED has registered a case against top executives of the 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 had told The Indian Express that KIIFB raised 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. The sources also said preliminary investigation had shown that bonds were issued without the permission of the central government which is in violation of rules as foreign debt cannot be raised without the Centre’s nod.

Denying charges of irregularities and discrepancies in the procedures or distribution of funds, Issac said there is no rule that a body corporate requires permission from the central government for borrowing. “I would like to have the Union government give me the rule whereby a body corporate needs permission from the central government before they go for masala bonds.”

Explained

How this may help the LDF

The ED’s move to register a case against KIIFB executives comes at a time when the CPM-led LDF faces a fierce battle to retain power in the state. The opposition, Congress-led UDF, has been targeting the CPM over what it terms a “nexus” with the BJP to keep the Congress out of power. With both sides accusing each other of hobnobbing with the BJP, some constituencies may see a triangular contest. Against this backdrop, this development could help the state ruling party to stand clear of such charges.

“Masala bonds are governed by guidelines of the RBI. And KIIFB as a body corporate had applied through proper channels for the permission from the RBI to arrange for the loan and an NOC was given,” Isaac said. “The central government’s permission is needed only if the state government is borrowing,” he added.

The minister denied any discrepancy in the deployment of the funds.

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