The irregularities in the multi-crore scam hit Karuvannur Service Cooperative Bank were committed at the behest of the party leaders of the ruling CPI(M) in the state, the Enforcement Directorate (ED) told the Kerala High Court on Monday.
The ED, which is investigating the fraud, told the court that during its investigation “it was found that many of the accused are office-bearers and members of the ruling political party CPI(M) and there was a deep-rooted conspiracy to embezzle money from the public and make gains for the party as well as its leaders.”Â
The agency further claimed that the bank fraud was “an organised crime” and its probe so far has revealed high-profile links, which include politicians, police officials, and individuals in local, district, and state-level administration.
“It is one of the biggest scams the state of Kerala has ever seen in terms of money, political links, and public fraud. The transactions undertaken by these individuals are in ‘benami’ names and cash-based operations, which are easy to dispose and conceal from the investigation.” the ED said in an affidavit filed in court.
Referring to the alleged role of the CPI(M) in the fraud, the ED said that party committees were operating accounts in the society without membership.
“Further, it is also revealed during the investigation that such accounts are maintained by CPI(M) party committee for different purposes including for collecting funds for the purchase of land, construction of party office, for raising funds for election expenses and souvenirs etc.
“The money flow out of these transactions are being investigated into and it is revealed from the investigation so far that senior political leaders of the party are involved in these transactions and unprecedented money laundering has been carried out by them,” the agency said.
The affidavit was filed in response to a plea by one of the accused in the case challenging the ED’s provisional attachment order and seeking de-freezing of his bank accounts.
The ED in its affidavit sought dismissal of the plea saying that since the amount involved was significant and the common people have lost their deposits, it was incumbent upon the agency to conduct an in-depth investigation with regard to the cash-based money trail and benami properties to unearth the actual culprits.
It also blamed the Registrar of Cooperative Societies in the state for “turning a blind eye” to the irregularities by various societies in Kerala.
“During investigation, from the copy of the audit reports of the bank for the past 10 years, it was revealed that the audit objections reported the irregularities to the joint registrar. However, the office of the registrar, after having knowledge of the above fraud and embezzlement, appears to have not taken these into observation and no actions were initiated.
“This practice of inaction on the audit observations and complaint appears to be in most of the cooperative societies regarding which the registrar had earlier been summoned. The timely action by the office of the registrar could have avoided such a big scam. In the investigation conducted by the ED, it is revealed that the Registrar of Cooperative Societies turned a blind eye to the irregularities by the societies,” the affidavit stated.
The ED said that such inaction on the part of the registrar also led to huge siphoning of funds from the Karuvannur bank leading to “depriving the depositors from getting their legitimate hard earned money”.
State Law Minister P Rajeev has denied the allegations in the ED affidavit and claimed that there was never any interference by the Left party in the running of the bank.
He also contended that no one was pressured by anyone in the party into committing any illegal act.
The minister also told reporters that more such issues are expected to come up in the coming days.
The agency had earlier claimed that its probe had found that “on the instructions of certain persons, who were district-level leaders and committee members of a certain political party and governed the bank, loans were disbursed by the bank manager through the agent in cash to non-member ‘benamis’ by mortgaging properties of poor members without their knowledge and laundered to the benefit of the accused.” This case of alleged fraud, beginning in 2010, at the Thrissur-based Karuvannur Cooperative Bank had triggered a political row in Kerala two years ago.
The money laundering case stems from 16 FIRs registered by the Kerala Police (Crime Branch) in Thrissur.
After the Kerala police registered the FIR in July 2021, the registrar in their audit found “diversions” of more than Rs 100 crore, the ED had said in 2022.
