A former Congress general secretary is in custody, the CPI has expelled ex-president of Kandala Service Cooperative Bank from party.
Depositors who lost their money are on dharna outside Kandala bank. (Supplied)
The Enforcement Directorate (ED) on Thursday, 9 November, charged two more cooperative banks in Kerala for alleged lending- and deposit-related money laundering.
Soon after an ED search on the CPI-controlled Kandala Service Cooperative Bank in Thiruvananthapuram, the party, on Thursday, expelled the bank’s former president N Bhasurangan from the organisation.
Also, a senior functionary of the state’s largest milk producers cooperative, Milma, Bhasurangan, fainted during the prolonged interrogation and was admitted to the ICU of a private hospital.
Despite his hospitalisation, the ED continued the searches on bank branches and properties linked to Bhasurangan and his associates.
In a separate development, the ED arrested a former general secretary of the state unit of the Congress, KK Abraham, from his residence in Wayanad for allegedly committing a similar scam at the Pulpally Urban Cooperative Bank.
With both the ruling UDF and the Opposition LDF feeling the ED heat over alleged frauds committed in cooperative banks, the BJP began the groundwork to project corruption in the state’s once robust cooperative sector as the major campaign plank during the fast-approaching Lok Sabha election.
Incidentally, the Reserve Bank of India (RBI), on Thursday, cautioned cooperative institutions against trapping investors under the guise of a bank and underlined that the central bank had not granted any licence to cooperative enterprises to do so.
The RBI also warned that there would be no insurance cover for investments in cooperative institutions.
The ongoing ED search on the Kandala Cooperative Bank caught the CPI and the LDF off guard since they have been fighting the Multi-State Cooperative Societies (Amendment) Bill, 2023, fearing it would pave the way for a parallel cooperative movement led by the BJP-RSS, ending the Left parties’ near monopoly in the sector in Kerala.
CPI leader Bhasurangan. (Supplied)
The ED officials swooped in on Kandala following a brief break after the Karvunnur Service Cooperative Bank scam episode in the Thrissur district, in which prominent CPI(M) leaders and their associates were held responsible.
A government audit found a depreciation of ₹101 crore in the Kandala bank’s assets, besides instances of loan fraud, exaggeration of the value of land put up as collateral for bank loans, using the same surety to sanction multiple loans to favoured persons, questionable credit restructuring, and nepotism in appointments.
Surprisingly, the state’s Cooperative Department registrar himself had forwarded a complaint to the ED, requesting the central agency to file a case and conduct additional investigation.
After news reports about the multi-crore swindle surfaced, scores of investors rushed to the Kandala bank, demanding a quick return of their deposits.
As many as 399 cooperative banks in the state have been accused of financial irregularities. Most of these banks were being run by the alliance partners of the ruling front.
The LDF has been facing an aggressive political campaign against it across the state, with its leaders accused of utilising party-controlled cooperative banks as a cover for money laundering.
The LDF was having difficulty fighting claims of pillaging of funds, money laundering, organised corruption, loan fraud, and nepotism in the cooperative sector.
Kerala has over 15,000 cooperative banking institutions, all of which had evolved into low-interest and welfare-oriented credit societies with a direct and critical impact on the lives of lakhs of ordinary citizens, ranging from dairy and rubber farmers to coir, cashew workers, toddy tappers, and weavers.
Beneficiaries of these institutions hold tremendous social and political clout and, as a key voting constituency, have Left leanings.
CPI Thiruvananthapuram district secretary Mangode Radhakrishnan told local media that the party had previously demoted Bhasurangan from its district executive to the mandalam committee after the Cooperative Department audit unearthed large-scale fraud that caused the bank’s assets to depreciate between 2015 and 2021.
The Karuvannur cooperative bank in Thrissur where irregularities worth over ₹150 crore have been detected. (Special Arrangement)
The CPI’s disciplinary action against the district’s senior leader stood in stark contrast to the CPI(M)’s strategy of creating legal and political obstacles to favour of party leaders arrested by the ED in connection with the comparable Karuvannur Service Cooperative Bank fraud.
According to a CPI source South First reached out to, the alleged fraud in the party-controlled bank increased people’s displeasure against the party and the administration.
Furthermore, he claimed that the CPI could not afford to ignore the fact that the 72 cooperative members who had lost their life savings by investing in the bank’s insolvency were primarily CPI supporters.
Meanwhile, VN Vasavan, Kerala’s Cooperation Minister, told journalists that his department had identified the fraud at Kandala and Pulpally.
He said that the state police were already looking into the bank fraud cases and that the ED inspection was politically motivated and unwarranted.
Meanwhile, ED sources confirmed the detention of Abraham, the ex-Congress general secretary, in connection with an alleged loan scam that occurred while he was the president of a service cooperative bank in Pulpally, Wayanad.
Abraham was taken into custody late Tuesday night from his home. On Wednesday, he was produced before a local court and was remanded in judicial custody.
After receiving several complaints of financial irregularities in the bank during Abraham’s tenure as its president, the ED launched an investigation.
According to official sources, Abraham has been accused of conspiring with a man identified as Sanjeevan to siphon off nearly ₹5 crore from the bank under the guise of fake loans.
The victims of bank fraud petitioned the ED, requesting an investigation into the scam. One of the victims committed suicide a few months ago.
KK Abraham. (Supplied)
Before the ED action, Abraham was arrested by the Kerala Police’s Vigilance Wing after an elderly couple submitted a cheating allegation.
Meanwhile, the ED was investigating top CPI(M) leaders NC Moideen, an MLA and former state industries minister, and MK Kannan, vice president of Kerala Bank, the state’s apex body of district-level cooperative banks, in connection with the Karuvannur scandal.
Moideen was the secretary of the CPI(M)’s Thrissur District Committee when the co-op bank’s board of directors, which included party leaders and officials loyal to the Left organisation’s employees’ wing reportedly perpetrated the fraud that left the financial institution in an unprecedented crisis.
With allegations of financial fraud levelled against many cooperative banks run by the party throughout the state, Chief Minister Pinarayi Vijayan recently assured investors that their deposits in cooperative banks would be safe and that no one would lose a single penny.
However, critics argued that the chief minister’s declaration was unreasonable and that the government made little effort to solve the financial difficulties of investors in the three years since the scams were exposed.
According to an answer given to MLA NA Nellikkunnu in the Kerala Assembly by Vasavan, frauds in Karuvannur and other banks included providing loans without following government rules, giving loans based on fake fixed deposits, hiring unqualified staff without permission, wrongly figuring out interest on deposits, and giving out loans without security.
May 17, 2024
May 17, 2024
May 16, 2024
May 16, 2024
May 16, 2024
May 16, 2024
