KIIFB masala bond case: ED notice 'politically motivated', alleges CPI(M)'s Thomas Isaac

Pathanamthitta (Kerala): Senior CPI (M) leader T M Thomas Isaac on Monday strongly criticised the Enforcement Directorate (ED) for issuing a show cause notice over the KIIFB Masala Bond case, calling the central agency's move "politically motivated".

As elections are round the corner in the state, the ED is campaigning for the ruling BJP at the Centre, Isaac told reporters here.

His remarks came hours after the media reported the showcause notice being issued by the ED to him, Kerala CM Pinarayi Vijayan and the CM's chief principal secretary K M Abraham in the KIIFB Masala Bond case.

The notice, which does not require a personal appearance, was issued about 10-12 days ago by the federal probe agency under the provisions of the Foreign Exchange Management Act (FEMA).

"This case first came up during the time of the local body elections in 2020. Then again, during the previous Assembly elections. After that, during the last Lok Sabha elections. Now, with the local body elections approaching once again, the case has been stirred up again," Isaac said.

The leader pointed out that the ED’s initial argument was that KIIFB did not have the authority to issue masala bonds. The power to grant permission lies solely with the Reserve Bank of India (RBI), and all procedures were carried out with the apex bank's approval, he said. Even after things were clarified, the ED had then served a notice for investigation, he alleged.

Isaac further alleged that the notice, which had been served to him earlier in the case, did not ask for documents related to KIIFB. Instead, they demanded details of the bank accounts of him, his family members, and the companies where he had served as a director, he said.

According to the Left leader, even though he had approached the High Court again seeking an explanation from the ED about the reason for summoning him, the central agency has not responded till date.

Accusing the agency of conducting a "baseless" investigation, Isaac said the BJP leaders at the Centre, who are the political masters of the ED, simply assumed malpractice due to crores of rupees involved in the KIIFB's transactions.

ED sources said the showcause notice is issued after the end of FEMA investigation, and that the contravention quantified in it is akin to a penalty.

The probe is related to the end-use of Rs 2,000 crore raised by KIIFB through masala bonds, and its compliance with the FEMA norms. KIIFB (Kerala Infrastructure Investment Fund Board) is the primary agency of the state government for financing large and critical infrastructure projects and had raised Rs 2,150 crore in 2019 through its debut masala bond issue as part of its plan to mobilise Rs 50,000 crore to fund large and critical infrastructure projects in the state.