India’s economic investigation agency, the Enforcement Directorate (ED), informed the Kerala state High Court Monday that the scam at Karuvannur Service Cooperative Bank was orchestrated by leaders of the state’s ruling party, the Communist Party of India (Marxist) (CPI(M)).
The affidavit filed by the ED asserts that CPI(M) party committees were involved in maintaining accounts without memberships and diverting funds for land purchases, party office construction, election expenses, and souvenirs. The agency blames India’s Registrar of Cooperative Societies for neglecting irregularities, stating that timely action could have prevented the scam and protected depositors. State Law Minister P Rajeev denied the allegations, claiming that there was no party interference in the bank’s operations. ED reportedly said to the court, “It was found that many of the accused are office-bearers and members of the ruling political party CPI(M) and there was a deep-rooted conspiracy to embezzle money from the public and make gains for the party as well as its leaders.”
An ED press release from October 13, 2023 stated that the probe revealed that bogus loans were repeatedly sanctioned without the knowledge of bank members. Additionally, benami loans were granted to non-members based on inflated property valuations in the names of other members, with the loan funds being siphoned off and laundered by the beneficiaries. Benami refers to property or assets held in someone else’s name to conceal the true ownership or to represent a nominee arrangement.
Another press release from September 19, 2023, suggested that the ED findings indicate that, under the guidance of district-level political party leaders and committee members controlling the bank, the Bank Manager facilitated cash disbursement of loans to non-member benamis. These loans were secured by mortgaging the properties of unsuspecting poor members, and the funds were subsequently laundered for the benefit of the accused.
The ED had commenced an investigation based on a police report, revealing that bank officials and staff, aided by private individuals between 2014 and 2020, fraudulently embezzled over Rs. 150 Crore.
Kerala is a state in south India known for its unique social indicators, high literacy rate, and progressive social policies. Kerala is notable for its political pluralism and has witnessed the rule of both major national parties and regional parties. CPI(M) is a major political party in India, following Marxist-Leninist ideology, with a strong presence in several states. It is known for its advocacy of communism and socialist policies. Kerala is the only state in India with a communist party in government.
