The Enforcement Directorate (ED) has escalated its probe into a significant foreign exchange violation case, issuing formal show-cause notices to Kerala Chief Minister Pinarayi Vijayan and several top officials. The notices, dated November 12, allege violations of the Foreign Exchange Management Act (FEMA) involving a substantial sum of Rs 467 crore.
Details of the Alleged FEMA Violations
The case centers on the Kerala Infrastructure Investment Fund Board (KIIFB), which is chaired by the Chief Minister. According to the ED, KIIFB raised Rs 2,673 crore by floating masala bonds on the London and Singapore stock exchanges. The agency alleges that out of this amount, Rs 467 crore was diverted for purchasing land, an activity explicitly prohibited under the Reserve Bank of India's (RBI) guidelines governing the use of such overseas funds.
The notices have been served to Chief Minister Pinarayi Vijayan, his Chief Principal Secretary, KIIFB CEO K.M. Abraham, and the state's former Finance Minister, T.M. Thomas Isaac. ED sources indicated that the recipients are not mandated to appear in person during the proceedings, and it is likely the CM will not do so.
Connection to Past Investigations
This is not the first time the ED's scrutiny has touched the Kerala Chief Minister's office. In 2022, the agency initiated a probe into officials concerning the high-profile UAE gold smuggling case. During that investigation, the ED allegedly traced a bribery amount of Rs 4 crore, which was linked to Vijayan's former aide, M. Sivasankar.
Sivasankar was subsequently arrested. The probe also uncovered alleged money laundering attempts, where Sivasankar reportedly escorted key accused Swapna Suresh to his chartered accountant Venugopal's premises to launder what the ED terms "proceeds of crime." As part of that case, the agency had recovered Rs 60 lakh from a State Bank of India locker. The cash was alleged to be part of payoffs deposited in a bank account jointly operated by Swapna Suresh and Venugopal.
Implications and Next Steps
The issuance of show-cause notices is a critical step in the ED's adjudication process for FEMA violations. It requires the recipients to explain why the alleged contraventions should not be held against them and why penalties should not be imposed. The case puts a spotlight on the financial governance of a key state infrastructure body and could have significant political ramifications in Kerala.
The response from the notified individuals and the subsequent findings of the ED will determine the future course of this high-stakes financial and legal battle.
