Kerala CM Pinarayi Vijayan gets ₹466 cr ED notice in KIIFB masala bond case

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The Enforcement Directorate has issued a ₹466-crore show cause notice to Kerala Chief Minister Pinarayi Vijayan, former finance minister Thomas Issac and CM’s Chief Principal Secretary KM Abraham in the KIIFB masala bond case, news agency PTI reported on Monday.

 

The notice was issued 10-12 days ago under the Foreign Exchange Management Act (Fema). The notice does not require the personal appearance of those named.

 

A show cause notice under Fema is issued after the investigation is completed. The alleged violation mentioned in the notice is considered similar to a financial penalty.

 

Probe into use of masala bond funds

 

The ED’s investigation focuses on how ₹2,000 crore, raised by the Kerala Infrastructure Investment Fund Board (KIIFB) through masala bonds, was used. The agency is examining whether KIIFB followed Fema rules while utilising these funds.

 

KIIFB, the state’s main infrastructure financing body, had raised ₹2,150 crore in 2019 through its first masala bond issue. The borrowing was part of its wider plan to mobilise ₹50,000 crore for major infrastructure projects across Kerala.   

Isaac calls ED action 'politically motivated'

 

Thomas Isaac strongly criticised the Enforcement Directorate’s show cause notice, calling it “politically motivated and a smokescreen", The Hindu reported.

 

Speaking to reporters on Monday, he said that the ED has repeatedly used the KIIFB “masala bond” issue before elections in Kerala, starting with the 2020 local body polls.

 

Isaac said the Reserve Bank of India (RBI) is the authority that clears masala bond approvals. According to him, “all actions were taken as per RBI approval". He further said that the ED has now submitted its charges before the Special Director, ED (Adjudication), in New Delhi.

 

Addressing allegations about the use of KIIFB funds, Isaac clarified that no land was bought using the money. “Moreover, when acquiring, RBI had also taken away the condition that land cannot be purchased,” he said.

 

(With agency inputs)