Karuvannur bank scam: ED indicts ruling CPI (M) as accused

The scam has raised serious concerns about the integrity and regulatory oversight within Kerala’s cooperative banking sector.

The seized properties included bank accounts of CPI(M) Thrissur District Committee and lower units.

CPI(M) state secretary MV Govindan speaking on the issue on Saturday, 29 June, said, “We (the party) came to know about the ED’s actions through media reports. If that’s correct then it’s a politically motivated one. They are engaged in political witch-hunting. The party will address this politically and legally.”

Also Read: Karuvannur co-op bank scam returns to haunt CPI(M), ED summons district secretary

ED summons

In April, ahead of the Lok Sabha polls, the ED summoned CPI(M) Thrissur district secretary MM Varghese for interrogation.

The notice was apparently part of the ED’s second phase of its probe into the scam, which has roiled the CPI(M).

The ED’s investigation has also cast a shadow of suspicion over the CPI(M) leadership, with allegations surfacing that key figures within the party were aware of the fraudulent activities but failed to take decisive action to prevent them.

Earlier, ED had questioned CPI(M) leaders, including MLA and former minister AC Moideen, and Kerala Bank vice-president MK Kannan.

The Kerala High Court criticised the ED on 18 March for the delay in concluding the probe into the scam. The court then observed that the agency could not keep the investigation going on forever, and directed it to file the case details.

The court then observed that the transactions involved in the bank scam posed serious questions, and they should be dealt with with the seriousness they deserve.

The latest developments will have to be considered as part of the second phase of the probe.

Related: Curious case of bank fraud that has made party workers suspect leaders

The case

The money laundering case stems from 16 FIRs registered by the Kerala Police (crime branch) in Thrissur.

This case of alleged fraud, beginning in 2010, in the Thrissur-based CPI(M)-controlled bank had triggered a political row in the state with the Left party saying that it had done no wrong.

The ED has said its probe in the case found that “on the instructions of certain persons, who were district-level leaders and committee members of a certain political party and governed the bank, loans were disbursed by the bank manager through the agent in cash to non-member benamis by mortgaging properties of poor members without their knowledge and laundered to the benefit of the accused”.

Bogus loans were sanctioned by the bank on the same property multiple times without the knowledge of members of Society, it alleged.

Investigation has also revealed that benami loans were sanctioned to non-members against inflated property valuations in the names of other members and such loan funds were siphoned off and laundered by the accused beneficiaries the agency had said in a statement earlier.

Four people have been arrested by the ED in this case till now.

Besides exposing vulnerabilities within the cooperative banking framework, the Karuvanur Bank fraud case also sparked broader discussions about regulatory loopholes and the need for stringent oversight to safeguard depositors’ interests and prevent such scams from recurring.

According to a rough estimate, Kerala has 15,000 cooperative banks and societies.

(Edited by Sumavarsha Kandula with inputs from Dileep V Kumar)