The co-operative bank in Karuvannur in Irinjalakkuda has been hit by a scam of Rs 300 crore in the past six years. The bank controlled by the CPM for about 40 years has borrowed up to Rs 50 lakh each to hundreds of unknown persons. At the same time, many poor people have been served with recovery notices when they had not even availed of a loan.
The co-operation assistant registrar has flagged serious anomalies including embezzlement, breach of trust, forgery of documents, and tinkering with online systems. The officer who inquired into allegations of corruption in the bank recommended further probe by expert officers, even from other departments, to expose the entire spectrum of financial irregularities.
The cooperation department’s internal investigation team submitted its report to the joint registrar on August 31, 2019. Copies of the report made their way to the Thrissur district committee office of the CPM. For two years, the ruling party sat on the largest cooperative scam the state had witnessed.
The police could not lay their hands on any of the accused even after it became clear that the scam’s magnitude would go over Rs 300 crore. In the meantime, one of the victims of the scam committed suicide.
Several people, some of them daily wage labourers, had received recovery notices from the bank asking them to repay Rs 50 lakh loan amount with interest. They all aver that they never borrowed money from the bank. Neither had not mortgaged any of their documents nor the bank issued any passbook to them. What exactly happened in the bank?
Inspectors from the cooperation department found out that loans of Rs 50 lakh had been granted to five people who had not even applied for them. Sivaraman, Aravindakshan, Ramani, Nisha and Sreedeep have their names on the ledger of the bank but they had not submitted loan applications or the required documents like tax-paid receipts or possession certificates.
According to the bank records, a Chalakudy resident has been granted a loan of Rs 1.85 crore based on four applications. He had mortgaged his land, which turned out to have been attached earlier by a bank as collateral for a bad loan. There were similar cases reported.
Mortgaged property released before repayment
The bankers also indulged in a strange practice of releasing the mortgaged property even before the loan was repaid. The borrowers just sold the land and never bothered to repay the loan. An accountant with the bank, C K Jills, has been found to have claimed the mortgaged property like this. He is one of the accused in the case.
Cooperative banks usually do not grant multiple loans to a person and they have an upper limit of Rs 50 lakh on loans. However, as many as 94 people have borrowed more than Rs 1 crore from the Karuvanuur Cooperative Bank. Of them, 12 people walked away with easy credit between Rs crore and Rs 14 crore.
Benami transactions
Most of the bad loans in the bank were granted to people who were acting for someone else. Employees as well as people who could pull strings in the administrative council secured loans in other people’s names. At least Rs 100 crore has been squandered by a former manager, accountant and a commission agent in other people’s names. They had applied for loans in the name of relatives.
How did the people who borrowed small amounts of money end up with manifold liabilities?
Their collaterals have been misused by the accused to get the banks to grant other loans. The owners of the mortgaged property had no knowledge that their records were being pledged again.
The police crime branch has registered a case with six accused including former secretary T R Sunil Kumar, former branch manager M K Biju, former senior accountant C K Jills, commission agent A K Bijoy and a middleman named Kiran aka Arun. Another accused is Reji Anil, an accountant at a supermarket controlled by the bank. Three of them are office-bearers of the CPM.
Sunil Kumar, the prime accused, is a member of the party’s Karuvannur local committee. He has worked as the secretary of the committee earlier. Biju, the second accused, is a senior member of the Porathisseri local committee. Jills is a member of the Thoduparambu branch committee. The party does not seem to antagonise them. Many of the beneficiaries of the scam have links to the ruling party.
Raju Muthrathiparambil, a van driver in Irinjalakuda, lives in a small house on three cents of land. He had no idea that he had mortgaged his land in the cooperative bank until he received a notice from the bank three months ago. The bank insists that he had mortgaged his property to borrow Rs 50 lakh.
Raju said he had neither borrowed nor mortgaged his property. He said the title deed of the property is safe and secure in his own house. Raju is a member of the cooperative bank but he hardly conducted any transaction with the bank.
He called up Biju, the second accused in the case, to air his grievance. Biju happened to be relative of Raju. Biju assured Raju that he would look into the matter. Nothing happened. Raju received a final recovery notice from the bank.
An all-knowing party?
CPM district secretary M M Varghese said last month that the party would take stern action against the people accused in the Karunavnnur bank scam. The press release was bereft of any details though. The party boss in the district played down the Rs 300 crore scam as a loan irregularity.
The party leadership received a complaint about the scam in the bank about two years ago. The party did not bother to take up the matter for discussion. When a party member complained for the second time, the matter was discussed in a meeting attended by two members of the state secretariat and three members of the state committee. A party-level inquiry commission comprising former MP P K Biju and Thrissur district secretariat member P K Shajan was constituted to look into the matter.
Though the party is in possession of its own inquiry report, the leaders have said that they would wait for the police investigation before taking any action against the accused.
One of the main findings of the party report was pointed at the administrative committee, which failed to check the corrupt practices in the bank. Nowhere does it say that party members have embezzled the money. Though party members are involved in the granting of the irregular loans and many were benefited from the liberal lending, the report played it safe.
The commission said that the cooperation department registrar’s office was a failure but never puts a figure to the scam. The inquiry commission spent two years investigating the scam but did not draw up a list of comrades involved in the scam. They only sought to blame the officers.
The CPM was clear about the scam in the bank at least two months prior to the election. The party, however, gave out strict instructions to ensure that the scam was not exposed until the election was over. The cooperation department was told not to initiate any action. The members of the bank who wanted to withdraw their deposits were persuaded to wait a little longer.
(This is the first part of Malayala Manorama's exclusive series exploring what happened at Karavannur.)
