KOCHI: Two days after Finance Minister Nirmala Sitharaman, during her visit to Kerala, criticised the state budget allocation to the Kerala Infrastructure Investment Fund Board (KIIFB), Enforcement Directorate (ED) that comes under the Centre on Tuesday registered a case against the board for allegedly violating the Foreign Exchange Management Act (FEMA) rules.
At the reception meeting for BJP state president K Surendran’s Vijaya Yatra in Tripunithura on Sunday, Sitharaman called the state’s budget a KIIFB budget. The move also comes a day after another central agency, CBI, informed the Supreme Court that Unitac Builders was a proxy company formed with the knowledge of officials to receive foreign funds for the state government’s LIFE Mission project.
According to ED sources, the agency has intensified its probe into the funds received by KIIFB in violation of norms. State Finance Minister T M Thomas Isaac will have to be questioned as part of the probe, they said.Notices have been sent to KIIFB CEO K M Abraham and officials of Axis Bank — the banking partner of the venture — to appear for interrogation next week.
“We had conducted a preliminary probe since the CAG came out with a report against KIIFB last year. We found that foreign funds were received without prior sanction of the Centre violating FEMA norms. Similarly, the masala bonds were raised without any permission,” an ED source said.
‘Questioning of Isaac inevitable’
According to the Enforcement Directorate (ED) official, questioning of Isaac is inevitable. “Isaac is very much involved in the entire Kerala Infrastructure Investment Fund Board (KIIFB) concept. We have to record his statement as part of the investigation. First, the details will be collected from the KIIFB CEO,” he said.
The case is probed by ED Deputy Director Prasanth Kumar. Earlier, the CAG found that the KIIFB had raised D2,150 crore from the international market without the Central government’s consent. The CAG noted that KIIFB had overstepped its legal bounds by issuing masala bonds to raise money from foreign markets in violation of Article 293 (1) of the Constitution. The ED had also written to RBI regarding its concern about the operations of KIIFB.