KOCHI: The Enforcement Directorate has informed the Kerala High Court that the investigation into the financial fraud in Karuvannur Service Cooperative Bank revealed that similar irregularities happened in 12 other cooperative societies in Kerala.
The service cooperative banks named are Ayyanthole, Thumboor, Nadackal, Mavelikkara, Moonilavu, Kandala, Perunkavilla, Mylapra, Chathannoor, Konni, and Marayamuttam and BSNL Engineers Cooperative Bank.
The cooperative societies are engaged in granting illegal loans to the public and it was done without any approval from the Registrar of Cooperative Societies. The Banking Regulation Act clearly states that no cooperative society shall carry out banking business in India unless it is a cooperative bank and holds a licence issued by RBI.
The affidavit was filed in response to a petition filed by Alisabri, an accused in the case, and others challenging the provisional attachment order of the ED and to de-freeze the bank accounts.
The ED stated that the investigation into the financial fraud in Karuvannur Service Cooperative Bank is in a crucial stage and the investigation into the balance proceeds of crime is under progress.
Regular audits and concurrent audits were conducted in the society and the scam was divulged, and during the audit itself a copy of the same must have been given to the governing body of the society and the Registrar of Co-operative Societies.
Therefore, it has to be believed that the Registrar of Co-operative Societies was aware of the scam happening in the society. It is, therefore, the responsibility of the registrar who even after knowing the irregularities conducted in the society, deliberately turned a blind eye to it repeatedly over money years, resulting in such a big scam, wherein a huge amount was swindled out of public deposits.
The decision-makers are politically influential people and their associates. This leads to the question of the functioning of entire cooperative societies which are under direct supervision/regulation by the registrar. It is incumbent upon the Directorate of Enforcement to examine the registrars under the provision of Section 3 of the Prevention of Money Laundering Act, 2002.
So, the prima facie involvement of the Registrar of Co-operative Societies needs to be examined. Though a summons was issued to the registrar, he approached the Kerala High Court and obtained a stay on the summons, which has hampered the probe.
Key takeaways from affidavit
The cooperative societies are engaged in granting illegal loans to the public, violating the Banking Regulations Act
As audit’s copy must have been given to the Registrar of Coop Societies at the time it is carried out, it is believed that the registrar was aware of the scam
The decision-makers are politically influential people and their associates. This leads to the question of the functioning of entire cooperative societies
