Kochi, July 17 (UNI) The Enforcement Directorate (ED) has issued a notice to former Kerala finance minister and CPI(M) leader Thomas Isaac directing him to appear before it in connection with the alleged violation of FEMA in KIIFB.
The ED directed him to appear before it on Tuesday. However, Thomas Isaac denied such reports saying that he is not going to appear before it, sources said on Sunday.
“Even if I get a notice, I am not going to appear before them. I have some other important things to do. They will have to arrest me,” he said.
Kerala Infrastructure Investment Fund Board (KIIFB), a primary agency of the state government for financing large and critical infrastructure projects, was constituted when Isaac became the State Finance Minister.
Meanwhile, based on the CAG finding in 2020 that KIIFB had caused a liability of Rs 3,100 crore to the State Government, the ED sent a letter to the Reserve Bank of India (RBI) seeking the details of the Masala Bond.
The ED also probed whether the Foreign Exchange Management Act (FEMA) was violated by the KIIFB. The issue came to the light after the CAG found that KIIFB was raising loans unconstitutionally.
According to the KIIFB balance sheet for the year 2019-20, it records a net loos of Rs 171.1 crore. The KIIFB recorded the loss first time after its revamp in 2016.
Pointing out faults in its method of availing foreign loans, the CAG reported serious lapses in its report in 2018-19 also. In 2019-20, it paid Rs 401.12 crore as interest for Masala bonds, guarantee commission and other loans availed from NABARD, SBI, Union Bank, Indian Bank, Syndicate Bank, KSFE bond.
The KIIFB raised Rs 2,150 through the Masala Bonds listed at London Stock Exchange at a high interest rate of 9.72 per cent. This is also to be noted that interest rate was less than 9.72 per cent in the case of domestic bonds.
Other states like Andhra Pradesh and Punjab had floated Statutory Liquidity Reserve Bonds (SLRB) at cheaper rates (7.5 to 8 per cent) through the Andhra Pradesh Industrial Infrastructure Corporation and the Punjab State Industrial Development Corporation respectively.
However, Kerala Government avoided its own Kerala State Industrial Development Corporation (KSIDC) to float bonds for raising funds. The losses of the KIIFB will be absorbed by the State Government through budgetary allocation based on an amended KIIFB Act.
Experts say most of the projects funded by KIIFB will not yield any profit. Though the Government claims that projects worth Rs 60,000 are on the roll till March 31, the KIIFB has disbursed only Rs 4,736 crore. Out of 4,746 crore, Rs 1,214 crore was given as grants, experts added.
The KIIFB is holding Rs 8,684 crore, raised through Masala Bond, as fixed deposits in various banks, mutual funds at lesser interest rates, proving financial mismanagement.