- CPM's undisclosed unpermitted accounts received money from bank employees, directors, and commissions from illegal loans
- CPM's 'Party Building Fund' account received money directly from borrowers' loan accounts. ED suspects the money to be kickbacks for sanctioning illegal loans
- The party was running a racket 'akin to extortion', raising money to buy land, build party offices, fund elections and meetings
- ED 'projects' CPM's 25 illegal accounts might have received at least Rs 100 crore in 10 years
Thrissur: The CPM operated multiple illegal accounts in the party-controlled Karuvannur Service Cooperative Bank to receive money from the society's directors and employees, and also kickbacks from illegal loans it allegedly authorised, said the Directorate of Enforcement (ED).
The money collected in these accounts has been used to meet the party's local expenses, fund meetings, elections, acquire land, and build party offices, said the central agency mandated with investigating money laundering cases. These accounts were illegal because the Kerala Cooperative Societies Act and the bylaws of Karuvannur bank prohibit entities from becoming members of the society and owning accounts, said ED's special public prosecutor M J Santhosh.
The Directorate of Enforcement shared a few details of the money trail that ended in the CPM's illegal bank accounts in a counter affidavit submitted to the High Court of Kerala to oppose the bail plea of an accused Ali Sabri.
ED said the CPM's parliamentary committee and sub-committee, formed to extra-constitutionally run Karuvannur cooperative society, often directed the board of directors to sanction illegal loans to ineligible people and then pocketed the commission.
The bank maintained a separate minutes book to record the directions given to the board of directors by the two committees, according to the affidavit. The sub-committee was headed by C K Chandran, a member of the CPM's Thrissur District Secretariat, the highest decision-making body of the party in the district.
According to the affidavit, the former secretary of the bank Sunil Kumar T R reportedly told ED that C K Chandran pressured the bank to give membership to Rajeevan Cheerambath M (64) and his family members, who were later given illegal loans. The family is among the top defaulters and owes a little above Rs 6 crore to the bank, according to ED documents.
The former manager of the bank Biju M K, who has turned an approver, reportedly told the ED that realty player Ramesh Puzhakkal alias Ramesh P V availed illegal loans to the tune of Rs 10 crore from Karuvannur bank. Later, Puzhakkal brought in Jacob Chackery (79) of Moorkanad and sought another Rs 1.5 crore loan on his property. The bank rejected the request because of the low valuation of Chackery's property offered as collateral.
Puzhakal then approached CPM Irinjalakuda Area Committee member R L Sreelal to get the loan by mortgaging the same property. Sreelal called a special meeting of the party sub-committee to recommend sanctioning this loan. On the decision of the party sub-committee, the illegal loan was sanctioned by the bank, the affidavit said quoting the former manager Biju M K.
ED found out that CPM's Porathissery North Local Committee and Porathissery South Local Committee illegally owned accounts in Karuvannur bank. The two accounts saw deposits of Rs 70 lakh in the past 10 years, said ED.
In 2011, CPM's Porathissery North Local Committee illegally opened another account called 'CPM Party Building Fund' to raise money to buy land and build a party office near Karuvannur. According to the affidavit, bank employees, party members, and the society's borrowers deposited "huge amounts" in the account. Various entries showed that money was transferred from borrowers' loan accounts to the 'Party Building Fund' account, it said.
On May 9, 2018, the former secretary Sunil Kumar T deposited Rs 1 lakh into the account, allegedly collected as commissions from illegally sanctioned loans, ED said. "This shows that the party collected money from borrowers of Karuvannur bank as commission for arranging such illegal loans," ED said and added that this "is nothing but proceeds of the crime generated out of the scheduled offence and akin to extortion".
The account also received contributions from the public and party levy from members.
CPM's Porathissery North Local Committee bought the land to build the party office in the name of the party's 'District Secretary' but it did not report the details of the money received in the account and the payments made to the party's Area Committee, the higher committee, said the affidavit, hinting at intra-party corruption.
Candidates borrowed money for election expenses
CPM's former Karuvannur Local Committee Secretary A R Peethambaran reportedly told ED that the party opened an illegal account in the Local Secretary's name to manage funds for the bank's election of directors. To meet the election expenses, the party took loans in the name of its candidates from the same bank.
Peethambaran said the party opened several illegal bank accounts in Karuvannur Service Cooperative Bank for various purposes. The party had a 'CPM Area Conference Souvenir Account' to collect money to buy souvenirs and paraphernalia for a conference. These accounts are illegal as per the bylaws of the society.
Undisclosed party accounts
The CPM's audited balance sheet as of March 31, 2023, submitted by District Secretary M M Varghese, reflected only four bank accounts and four FDs, said ED. However, the investigation by the Directorate of Enforcement found that the CPM maintained 25 undisclosed accounts in cooperative societies in the name of 17 area committees. The accounts had a total balance of Rs 1.73 crore and fixed deposits of Rs 63.98 lakh as of November 30, 2023, ED's counter affidavit said.
ED projected that these undisclosed accounts have seen deposits to the tune of Rs 100 crore in the past 10 years.
The 'biggest' scam
The investigation by Kerala Police's Crime Branch and ED found that Karuvannur Service Cooperative Bank sanctioned more than one loan to the same persons against the bank's loan limit, gave more than one loan by re-mortgaging the same property, gave loans by mortgaging someone else's property without their knowledge, sanctioned disproportionate loans on low-valued property, and illegally gave membership to persons living outside the jurisdiction of the bank and then went on to sanction loans to them. Initially, the bank's new secretary in charge Sreekala E S pegged the fraud at Rs 100 crore in her complaint filed at Irinjalakuda police station on July 14, 2021. But subsequent auditing found that 90 willful defaulters owe Rs 343 crore to Karuvannur bank as of December 31, 2022.
In November 2023, ED submitted a 26,000-page chargesheet naming 55 accused in the scam which it billed as "the biggest scams Kerala has ever seen in terms of money, political links, and public fraud".