Kochi: The High Court, monitoring the Karuvannur bank scam probe, has directed the Kerala Police Crime Branch to investigate all accused named by the Enforcement Directorate (ED) — a list that includes senior CPM leaders such as Industries Minister P Rajeev, former ministers A C Moideen and Paloli Mohammed Kutty.
Justice D K Singh warned the investigating officer — Thrissur Crime Branch DySP E Balakrishnan — “against coming under pressure from any political or bureaucratic quarters”. The single bench added, “If this court finds that the investigation has not been carried out properly and the roles of political activists have not been probed fairly, the investigating officer will bear the brunt for his dereliction of duty”.
The court was hearing a petition filed in August 2021 by Suresh M V, a BJP leader from Thrissur, seeking a CBI inquiry into the alleged scam at Karuvannur Service Cooperative Bank.
On October 16, 2023, Justice P V Kunhikrishnan rejected the plea for a CBI probe, but since then, the court has been monitoring the progress of the Crime Branch’s investigation.
On Friday, the ED submitted a damning counter affidavit in the high court accusing 11 CPM leaders of pressurising the bank employees to grant illegal loans. The names include Rajeev, who was the former Secretary of CPM’s Ernakulam District Committee; Moideen, who was the Secretary of CPM’s Thrissur District Committee; veteran CPM leader and minister Paloli Mohammed Kutty from Malappuram; C K Chandran, a former member of CPM’s Thrissur District Secretariat, deputed by the party to steer the bank; CPM’s Porathissery Local Secretary M R Raju, A R Peethambaran, another local secretary; Sreenivas, Secretary of CPM’s Cherpu Area Committee; and K R Vijaya, member of CPM’s area committee. The other names on the list of CPM leaders are Ullas Kalakkatu and Manoj V A.
Justice Singh, after reading out the names of a few politicians, directed DySP Balakrishnan to collect the affidavit and a copy of the Enforcement Case Information Report (ECIR), equivalent to police FIR, from ED’s special public prosecutor Adv Jaishankar V Nair, and said he expected a fair investigation from the officer.
“Many accused are office-bearers and members of the CPM. There was a deep-rooted conspiracy to embezzle money from the public and make gains for the party, as well as its leaders,” ED’s Kochi Deputy Director Rajesh M Nair said in the affidavit.
ED said the CPM maintained 25 undisclosed and illegal accounts in the Karuvannur Bank for purposes such as collecting funds for the purchase of land, building party offices, raising funds for election expenses, and buying souvenirs for party conferences. These accounts belonged to 17 party committees.
As of March 31, 2023, these accounts had a balance of Rs 1.73 crore and fixed deposits worth Rs 63.98 lakh. However, ED “projected” that at least Rs 100 crore has passed through these undisclosed accounts from April 2013 to March 2023.
Apart from the 10% levy collected from local body members and society directors’ honorarium, the CPM also collected commission from borrowers who were sanctioned illegal loans, said ED, the central agency mandated to investigate money laundering cases.
In 2011, the CPM opened an account in the name of ‘Party Building Fund’ to collect money to build an office at Karuvannur. The account saw a large number of transactions, said the ED. The amounts were transferred from borrowers’ loan accounts. “This shows that the party collected money from borrowers as commission for arranging such illegal loans,” ED added. The money received was proceeds of crimes, akin to extortion, the central agency said.
Many illegal accounts were closed after the purpose was served to avoid tracking by investigating agencies or the Election Commission of India, it said. So far, ED has attached properties worth Rs 128 crore in connection with its investigation into the money laundering angle in the Karuvannur bank scam.
The agency said it filed an application in the Special Court for PMLA offences in Kochi to restore the properties to the victims who lost money in the scam. However, the process is being delayed because Karuvannur Bank is not filing an application under Section 8 (7) of PMLA. The century-old Karuvannur Service Cooperative Bank is mandated to operate only in Porathissery, Madayikonam, and Irinjalakuda villages in the Irinjalakuda municipality. The multi-crore scam that hit the bank became public when the then secretary in charge, Sreekala E S, filed a complaint at the Irinjalakuda Police Station on July 14, 2021.
She accused a clique of employees of swindling around Rs 100 crore by issuing multiple loans to the same individuals, mortgaging or re-mortgaging borrowers’ properties without their knowledge, and extending loans to outsiders by forging address proof to enrol them as members.
The scandal soon spiralled into a more ruthless racket. Politically connected moneylenders preyed on loan defaulters of nationalised banks, settled their dues, retrieved property documents, and repledged them at cooperative banks like Karuvannur for larger loans. The lenders siphoned off the fresh funds, leaving the original defaulters burdened with greater debt and the imminent loss of both land and home.