Published Jun 06, 2026 | 8:08 PM ⚊ Updated Jun 06, 2026 | 9:12 PM
Karuvannur Service Cooperative Bank scam exposed deep cracks in Kerala's famed cooperative banking system. Inset: K Radhakrishnan (L) and AC Moideen.
Synopsis: The court’s decision to arraign the CPI(M) and its senior leaders in the Karuvannur cooperative bank scam marks a dramatic new chapter in Kerala’s politically explosive financial scandal. By finding prima facie evidence that the party may have benefited from laundered money, the case has now evolved from a cooperative sector scam into a high-stakes political and legal battle with serious implications for the CPI(M)’s credibility in Kerala.
In a major legal and political setback for the CPI(M), a Special Prevention of Money Laundering Act (PMLA) Court in Kochi has found prima facie evidence against the party and several of its senior leaders in the Karuvannur Service Cooperative Bank fraud case.
The finding has now cleared the way for the trial of the accused in the alleged money laundering conspiracy.
The Special PMLA Court, which accepted the Enforcement Directorate (ED)’s supplementary prosecution complaint against 29 accused, including Lok Sabha MP K Radhakrishnan, sitting MLA AC Moideen and several party functionaries linked to the cooperative bank, has also arraigned the CPI(M).
With the court granting permission to proceed against the accused, summons are expected to be issued, directing them to appear before the ED on 4 July.
The latest order has significantly widened the scope of the case, which has already emerged as one of Kerala’s most politically sensitive cooperative sector scandals.
Proceedings had earlier begun against 55 accused. With the supplementary complaint, the total number of accused has risen to 83. Two among them later turned approvers, while two others died during the course of the investigation.
The ED has so far attached properties and assets worth ₹128 crore in the case.
The agency alleged that nearly ₹232 crore was routed through fraudulent and benami loan transactions, though the core loan fraud has been estimated at around ₹180 crore.
Related: ED files final chargesheet, names CPI(M) and 28 people
Judge P Sabarinathan observed after examining the supplementary complaint that there was sufficient prima facie material to proceed against the CPI(M) leadership and other accused under the provisions of the anti-money laundering law.
The ED alleged that the fraud operated through a network involving bank officials, middlemen, borrowers and political functionaries. Investigators alleged that multiple loans were sanctioned repeatedly on the same property without the knowledge of depositors or genuine members of the cooperative society.
The probe also found that loans were allegedly granted to non-members using inflated property valuations and benami arrangements. The money generated through these loans was allegedly siphoned off and laundered through various channels.
The ED’s case against the CPI(M), arraigned as the 68th accused, centres on two key allegations.
The agency claimed that when large-scale irregularities surfaced at the Karuvannur Cooperative Bank around 2012-13, the then CPI(M) district leadership formed a sub-committee to supervise and control the bank’s functioning.
Senior party leaders allegedly exerted pressure on the governing body to sanction high-value loans to ineligible beneficiaries, many of which later turned into bad debts.
The second allegation relates to the construction of a CPI(M) party office at Porathissery in 2017.
According to the prosecution, a bank account titled “CPI(M) PRY Building Fund” was opened at the Karuvannur Bank during K Radhakrishnan’s tenure as the party’s Thrissur district secretary.
The ED alleged that commissions collected from beneficiaries of illegal loans were deposited into this account with the involvement of bank officials, governing body members and intermediaries.
The money was later allegedly used to purchase land in the name of MM Varghese for the construction of the party office. The ED argued that by allegedly accepting and utilising funds generated through illegal loan transactions, the party became a beneficiary of the proceeds of crime.
The agency has also alleged that AC Moideen, while serving as CPI(M) Thrissur district secretary, played a role in appointing the party-level committee that oversaw the bank and influenced the sanctioning of irregular loans.
The supplementary prosecution complaint was filed in 2025, but detailed arguments were concluded only recently.
Appearing for the ED, Special Public Prosecutor MJ Santhosh argued that despite earlier Kerala High Court directions for a comprehensive probe into the role of politicians and others linked to the scam, there had been little visible progress in the parallel Crime Branch investigation.
The ED filed its first chargesheet in November 2023 following the arrest of former Wadakkanchery municipal councillor PR Aravindakshan, private money lender P Satheeshkumar, bank accountant CK Jilse and PP Kiran of Thrissur under PMLA provisions.
While the Crime Branch had originally named 31 accused in the predicate offences, the ED proceeded against a different set of accused under money laundering provisions, naming only 13 from the original list.
Related: Family of deceased man says bank did not allow withdrawal of deposit
The Karuvannur Service Cooperative Bank scam exposed deep cracks in the cooperative banking system and left thousands of ordinary depositors stranded without access to their savings.
After years of alleged irregularities, the bank was brought under administrator rule in 2020.
Investigators said the fraud operated quietly for more than a decade through a network of illegal loans, forged documents and proxy transactions.
The bank, originally established to support local communities with affordable banking services, allegedly became a channel for large-scale financial manipulation involving insiders, middlemen and politically connected individuals.
According to probe agencies, loans were sanctioned using fabricated records, inflated property valuations and forged signatures. In several cases, properties belonging to unsuspecting members were allegedly mortgaged multiple times without their knowledge to secure loans for outsiders and benami beneficiaries.
Rules governing collateral, membership verification and lending procedures were routinely bypassed, investigators alleged.
The biggest victims were the depositors — pensioners, daily wage workers, small traders and families — who had entrusted their life savings to the cooperative bank. Even years after the scandal erupted, thousands are still waiting for full repayment.
Government figures indicated that more than ₹263 crore remains unpaid to over 30,000 depositors. Though authorities introduced a revival package and partial repayments have been made in phases, recovery has been slow due to mounting bad loans and pending legal proceedings.
The ED’s investigation under the PMLA has added a major political dimension to the case.
The CPI(M) has strongly denied the allegations, accusing central agencies of pursuing politically motivated investigations aimed at targeting the then-ruling Left government in Kerala.
Despite the controversy, in February, the Left Democratic Front retained control of the bank’s governing body during subsequent elections.
Responding to the development, the CPI(M) state secretariat alleged that the ED’s move was part of a politically motivated attempt to target and defame senior party leaders.
The party said the summons issued by the PMLA court to CPI(M) central committee member and MP Radhakrishnan, state committee member and Moideen, state committee member Varghese and others was a continuation of efforts to “hunt down” top CPI(M) leaders in connection with the bank scam.
The party said it was unprecedented to implicate the CPI(M) and those who served as district secretaries during the relevant period in a scam that occurred in a cooperative bank.
Defending the leaders named in the case, the state secretariat said Radhakrishnan, Moideen and Varghese were well known and that the public would not believe the allegations.
The CPI(M) further said the alleged irregularities in the bank had already been investigated by the State Police and the Cooperation Department, leading to the arrest of the accused.
It alleged that the ED intervened with political motives while the Crime Branch probe was progressing.
The State Secretariat said the party would fight the case both legally and politically and called upon people to recognise what it described as the “hostile mindset” behind the ED’s actions.
(Edited by Majnu Babu).
