A six-member SFIO team will probe the controversial financial dealings involving Exalogis, CMRL, and KSIDC.
File photo of Veena Vijayan with husband PA Muhammad Riyas. (PAMuhammadRiyas/Facebook)
The Union Ministry of Corporate Affairs has ordered the Serious Fraud Investigation Office (SFIO) — a statutory body that functions under it — to probe the now-defunct Exalogic Solutions Private Limited.
The Bengaluru-based consultancy firm was owned by Kerala Chief Minister Pinarayi Vijayan’s daughter Veena Thaikandiyil.
The investigation is also expected to look into the financial transactions of the public-sector Kerala State Industrial Development Corporation (KSIDC) and private firm Cochin Minerals and Rutile Limited (CMRL), which mines and separates beach mineral sand from Kerala’s central and southern coasts.
According to an order dated 31 January, a six-member team would probe the controversial financial dealings involving the three companies under Section 212 (1)(a) and (c) of the Companies Act of 2013. The team has been asked to complete the probe within eight months.
The Union ministry instructed the SFIO to probe Exalogic a day after Vijayan claimed in the Kerala Assembly that his daughter floated the company using the retirement benefits of his schoolteacher wife Kamala Vijayan.
The SFIO has the right to summon and interrogate those accused of committing financial fraud, and it could prosecute the accused.
The Union government issued the probe order even as the Kerala High Court has been considering a petition filed by lawyer-turned-politician Shone George, who joined the BJP along with his father PC George on 30 January.
The order by the Union ministry. (Sourced)
Shone sought an SFIO probe against Veena and the three firms facing charges of transacting unaccounted-for money as part of an alleged corrupt deal.
On 25 January, the Union ministry informed the high court that it was not averse to ordering an SFIO investigation against Veena and her company.
Considered to be one of the most powerful women in Kerala, Veena has been conducting IT business for a long.
Her husband PA Mohammed Riyas, a top leader of the CPI(M), holds the Tourism and Public Works portfolios in the Pinarayi Vijayan Cabinet.
On 31 January, Vijayan strongly defended his daughter in the state Assembly and said “heinous political motives” were behind the allegations against her.
“Those who targeted me, earlier haunted my wife. Now, their allegations are directed towards my daughter Veena. My daughter started a small IT firm using the retirement amount my wife received as a schoolteacher. All this will not faze me, as my hands are clean,” Vijayan said with raised hands.
He was replying to the motion of thanks to the Governor’s customary policy address before the start of the Assembly’s Budget session.
Vijayan challenged the Opposition to level further allegations and asked if people would believe them. He remained silent regarding the investigation the registrar of companies had launched into his daughter’s business.
Opposition leader VD Satheesan countered Vijayan’s statement, saying his claims were not true.
The chief minister had claimed that his daughter’s company was not heard before the interim settlement board of the Income Tax (I-T) Department came up with its conclusions on the deal between Exalogic and CMRL.
Veena Thaikandiyil with her husband, Kerala’s Tourism and PWD minister P A Muhammed Riyas. (Supplied)
“The Registrar of Companies (RoC) has said that the company (Exalogic) had not submitted any documents, and a case had to be registered against it,” the Congress leader said.
“This means what the chief minister stated in the Assembly was not true. Both statutory bodies found that the intention was money laundering,” he said.
In an earlier report, the RoC said Exalogic failed to furnish documents to prove the financial transactions involving CMRL were genuine.
The KSIDC came under the scanner since the PSU was a shareholder in CMRL.
A week ago, the KSIDC enlisted the services of CS Vaidyanathan, a noted Supreme Court lawyer who represented Ram Lalla in the Ayodhya Ram Janmabhoomi case, to defend it in the high court against the demand for an SFIO probe against it and the other two companies.
Vaidyanathan appeared online on 24 January and reportedly sent a letter to the KSIDC demanding ₹25 lakh as a fee for a single sitting. He also sought office charges from the public-sector company.
Though Vaidyanathan was expected to appear for the company in the high court on 10 February, the whole process has turned futile with the Union ministry ordering the SFIO probe.
The KSIDC, which falls under the Kerala Industries Department, has an investment of 13.4 percent — or ₹1.05 crore — in CMRL.
The RoC in Bengaluru launched an initiative that led to the SFIO investigation. The RoC wrote to the Union ministry, saying the financial dealings between CMRL and Exalogic would fall under the Prevention of Money Laundering Act of 2002.
The RoC also recommended investigations into the dealings by central investigation agencies such as the Enforcement Directorate (ED) or the CBI. Reports said the ED and CBI were now studying the case.
Pinarayi Vijayan addresses the public via video on social media. (Screengrab)
Exalogic allegedly failed to provide documents supporting its claim that it had accepted money in return for services rendered to CMRL.
The RoC report stated that based on the preliminary investigation, it appeared that Exalogic and CMRL had committed offences that would invite jail terms and penalties under the Companies Act.
The RoC also stated that the involved companies were not cooperating with investigations and even refused to respond to queries.
Meanwhile, the Congress-led Opposition UDF alleged that the money was paid to Veena and her company as a reward for undue favours the CMRL had received from the state government under Vijayan.
While raising the issue in the Kerala Assembly, Congress leader Mathew Kuzhalnadan alleged that the chief minister’s daughter had not even paid the GST for her company.
Kuzhalnadan, who raised the issue for the first time, had also approached the Vigilance Department, seeking a probe against Veena over allegations of bribes.
Meanwhile, the CPI(M) attributed political motives to the developments against Veena and Exalogic.
“Central agencies like the ED and the CBI are conducting investigations against Opposition leaders with clear political motives ahead of the general elections. The probe against Veena is part of the resolve of the BJP to defame Vijayan ahead of the election,” CPI(M) state secretary MV Govindan told South First.
Veena has been accused of committing financial fraud for over a year, with the Income-Tax Interim Settlement Board ruling that the CMRL had paid Exalogic Solutions ₹1.72 crore between 2017 and 2020.
The agency observed that despite the money being accepted, no service was rendered to CMRL.
Initial investigations by the Corporate Affairs ministry found that Veena had obtained dormant status for her IT company by suppressing details on the pending proceedings with the Registrar of Companies.
The mineral sand-rich shores of Alapad in Kollam. (KA Shaji/South First)
According to RoC officials, Veena violated Section 448 of the Companies Act, which, if proven, could result in imprisonment and a penalty.
The officials said the developments started in 2020 after the RoC received a complaint against Exalogic Solutions and Veena alleging that crores of rupees were paid illegally by CMRL.
Then, Bengaluru RoC DS Varun summoned Veena after initiating a probe.
As the probe progressed, Veena applied for dormant status in November 2022 without revealing the pending proceedings against the company.
Officials said it was a clear violation of the Companies Act.
As per the findings of the interim settlement board, CMRL allegedly paid ₹71 lakh to Exalogic and ₹55 lakh to Veena personally between 2017 and 2019.
The board found that the KSIDC played a significant role in appointing key CMRL management personnel.
According to the RoC, Exalogic is a private firm (a one-person company) founded on 19 September 2014, by Veena, with an authorised share capital of ₹1 lakh.
The company, with its registered address in Bengaluru, reportedly offered software solutions.
A key CMRL management personnel reportedly told the I-T department that the money was paid to Veena without receiving any service.
The initial probe also found that the auditor still needed to sign the 2021-22 audit report filed by CMRL.
Meanwhile, Kochi-based CMRL, promoted by controversial businessmen SN Sasidharan Kartha and Mathew M Cherian, has been accused of illegally mining mineral sand from the southern coasts of Kerala to segregate and export synthetic rutile.
It has also been alleged that the company was paying successive regimes to act against environmentalists and other activists who voiced their concerns over the illegal mining of mineral sand.
I-T sources said CMRL has been inflating its expenditure since 2019. The state allegedly paid huge amounts to several individuals, including politicians and media houses, to avoid opposition to its illegal mining operations.
Going by the notes made by the principal commissioner of I-T, CMRL issued a letter to Veena on 20 December, 2016, saying the company was “pleased to engage” her as its IT and marketing consultant on a retainer basis from 1 January 2017.
It also said she would be paid a consolidated sum of ₹5 lakh per month for her services.
Veena and Exalogic signed an agreement with CMRL on 2 March, 2017. As per the agreement, Exalogic was to provide services of “development, maintenance, and management of software for the daily business and operation of CMRL’s corporate office and factory located in Aluva”.
Veena Vijayan with her father Pinarayi Vijayan, husband Mohammed Riyas, and mother Kamala Vijayan. (Facebook)
The agreement also mentioned that the service provider was entitled to a monthly remuneration of ₹3 lakh.
However, the company’s Chief Financial Officer (CFO) KS Suresh Kumar, chief general manager (CGM), and Secretary P Suresh Kumar told investigators in January 2019 that they were still waiting to see any software developed by Exalogic.
CMRL MD Kartha, in a sworn statement to the I-T Department, said, “Both these vendors (Veena Vijayan and Exalogic) have not provided any work, services, software maintenance, consultancy, or any other form of service to our expectations till date. However, monthly payments are being made as per the agreements.”
Although transactions were made through banks and such payments for business expenses were permissible, the board ruled that the transactions to Veena and Exalogic were “illegal” as no services were rendered.
Veena has faced charges of financial misappropriation in the past as well. She was accused of accepting favours to protect the accused in the sensational diplomatic channel gold-smuggling case that rocked Kerala.
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