India’s financial watchdog, the Enforcement Directorate (ED), has informed the Kerala State High Court that leaders of the Communist Party of India (Marxist) (CPI(M)), the ruling party in the state, were involved in a scam at the Karuvannur Service Cooperative Bank. The accusation was formally presented in an affidavit submitted to the court. Click here for the complete coverage.
The affidavit alleges that CPI(M) party committees were complicit in maintaining accounts without appropriate memberships and diverting funds for various activities, including land purchases, construction of party offices, election expenses, and the creation of souvenirs. Alongside this, India’s Registrar of Cooperative Societies is implicated in neglecting these irregularities.
The ED had commenced an investigation based on a police report, exposing that between 2014 and 2020, bank officials, staff and assisted by private individuals, fraudulently embezzled over Rs. 150 Crore. To get more insight into the initial criminal activities, you can access the ED’s press release.
However, the State Law Minister, P Rajeev, dismissed these accusations, claiming that there was no interference from the party in the bank’s operations. ED reportedly said to the court, “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.”
Included in the October 13, 2023 ED’s press release was the revelation that bank members were kept in the dark while bogus loans were repeatedly sanctioned. Furthermore, ‘benami’ loans were given to non-members based on inflated property valuations with the loan funds being siphoned off and laundered by the beneficiaries. The term ‘benami’ refers to properties or assets held in someone else’s name to either conceal the true ownership or to represent a nominee arrangement.
An additional press release issued on September 19, 2023, suggested that district-level political party leaders and committee members who controlled the bank guided the Bank Manager to disburse cash loans to non-member benamis. The loans were then secured by mortgaging properties owned by unsuspecting poor members, and the funds were subsequently laundered for the benefit of the accused.
For more thorough coverage of the investigation and the alleged scam, visit the original story here.