Kerala CM gets Rs 466-crore ED notice in masala bond case

The Enforcement Directorate (ED) has issued a show-cause notice to Kerala Chief Minister Pinarayi Vijayan, former finance minister Thomas Issac and Vijayan’s Chief Principal Secretary KM Abraham in the Kerala Infrastructure Investment Fund Board (KIIFB) masala bond case.

The notice was issued on November 12 under the Foreign Exchange Management Act (FEMA), though it does not require personal appearance of those named.

A show-cause notice under FEMA is issued after the investigation is completed. The alleged violation mentioned in the notice is considered similar to a financial penalty.

The ED’s investigation focussed on how Rs 2,000 crore, raised by the KIIFB through masala bonds, was used. The agency is examining whether KIIFB followed FEMA rules while utilising these funds.

KIIFB, the state’s main infrastructure financing body, had raised Rs 2,150 crore in 2019 through its first masala bond issue. The borrowing was part of its wider plan to mobilise Rs 50,000 crore for major infrastructure projects across Kerala.

The anti-money laundering agency had issued show-cause notices to the aforementioned persons on November 12 during the proceedings of adjudication in relation to contravention of provisions of FEMA and the RBI master Direction by KIIFB and its authorities amounting to Rs 466.91 crore.