ED Enquiring Into KIIFB’s Yes Bank Deposit
The Enforcement Directorate (ED) is probing Kerala Infrastructure Investment Fund Board’s (KIIFB) parking of Rs 250 crore in Yes Bank, a parliament document reveals.
It was The Lede that reported the exclusive story in March 2020, that KIIFB had parked Rs 250 crore with Yes Bank and withdrew it ‘surprisingly’ without any trigger.
The deposit details were mentioned in KIIFB’s 2018-19 financial statements too.
In a reply to a starred question raised in the Rajya Sabha, Anurag Singh Thakur, the Minister of State at the Ministry of Finance, has said that “Enforcement Directorate has received complaints against KIIFB CEO and KIIFB alleging that they had parked Rs 250 crore in Yes Bank. The ED has initiated enquiries in the matter and any disclosure in the matter at this stage can impact the process,” the reply added.
In 2018 itself, Kerala Opposition leader Ramesh Chennithala had said that there are irregularities in depositing KIIFB money in private banks.
And in a letter written to Communist Party Marxist (CPM) general secretary Sitaram Yechury, Chennithala had urged him to clarify on the double stand taken by the CPM and initiate an inquiry into the alleged irregularities in the allocation of KIIFB funds to private banks.
“KIIFB funds worth Rs 1262 crore have been parked in new generation private banks, including ICICI Bank, IndusInd Bank, Kotak Mahindra Bank, and Yes Bank,” he had written in his letter.
Responding to the allegations then, Dr Thomas Isaac, the Kerala Finance Minister, had said that, “The KIIFB Act does not prevent the KIIFB executive board from investing in private banks.”
Yes Bank Collapse
In April 2018 itself, the Reserve Bank of India (RBI) had found serious lapses with Yes Bank and its CEO and co-founder Rana Kapoor. Even though Yes Bank wanted to extend Rana’s tenure till 2021, RBI refused permission.
In December 2018, Yes Bank appointed TS Vijayan, the former chief of IRDAI, as its independent director.
The bank also included Vijayan in the search and selection committee to shortlist a successor to Rana Kapoor.
In January 2019, Ravneet Gill was picked by Vijayan and his team.
And in March, 2020, the RBI disbanded the Yes Bank board in and capped the withdrawal limit by account-holders to Rs 50,000.
Vijayan was posted in Yes Bank as director for five years. But he left Yes Bank and has joined KIIFB.
A July 2020 document from KIIFB states - “new member on the Board Sri. TS Vijayan, Former Chairman, Insurance Regulatory and Development Authority (IRDA) came to the meeting venue, despite the lockdown restrictions to attend the meeting.”
Meanwhile, during the last week of August, sources at the Ministry of Finance in New Delhi had told The Lede that a possible information leak to KIIFB when Vijayan was Yes Bank director is being probed.
On September 03, The Lede had reported the story too.
The source had told The Lede that the Ministry of Finance’s Department of Financial Services on 19 March 2020, has slapped a show-cause notice on Vijayan for violation of LIC pension rules and staff regulations as a pensioner of LIC of India.
Vijayan was the Chairman of LIC between 2006 and 2011.
The source had added that R Balasubramanian, Chief Vigilance Officer at Department of Financial Services, had been appointed as the inquiry officer and Umesh Chandra, Under Secretary at Department of Financial Services, had been appointed as presenting officer.
Interestingly, The Lede has found that KIIFB had taken a decision in 2019 itself to induct TS Vijayan in KIIFB.
"ED Has Not Contacted KIIFB"
Meanwhile, late in the evening, KIIFB CEO KM Abraham met the press and said that they have not been contacted by ED on the ‘probe.’
“We have not been contacted by ED. We don’t know whether they are probing the issue,” the KIIFB CEO said.
He added that the word used in the parliament document is “enquiries”.
“I am doubtful whether ED would come with a probe if they see the accounts and details,” the CEO said, adding that deposits were made with Yes Bank because the interest rates were good.
On the appointment of Vijayan, the CEO said that he was appointed when a post became vacant in the KIIFB director board following the death of D Babu Paul, IAS.
Kerala Infrastructure Investment Fund Board (KIIFC) is a Kerala government-owned financial institution set up to mobilise funds for infrastructure development from outside the state revenue.
Even though tax payer money will be used to repay the KIIFB loans, a CAG audit is not permitted.
While Kerala finance minister Thomas Isaac repeatedly says that a CAG audit is allowed by Section 14(1), opposition and financial analysts expressed their surprise over why an audit under Section 20 is being denied.
According to Kerala finance minister, the CAG is free to audit all receipts and expenditures of KIIFB, including those related to Masala Bond, “as the authority is empowered to do so under Section 14(1) of the CAG Act”.
“The CAG has the power to audit all the accounts of KIIFB under Section 14(1), while Section 14(2) empowers the authority to approach the government if it finds scope for auditing beyond Section 14(1),” the minister had said earlier.
In November 2019, denying a comprehensive audit into KIIFB, the Kerala finance minister had given a written reply in the Kerala Assembly that KIIFB formed under the 1999 Act is a statutory corporate body.
A statutory corporation is a corporation set up by the state, which might be ordinary companies/corporations owned by a government with or without other shareholders, or they might be a body without shareholders that is controlled by national or sub-national government to the extent provided for in the creating legislation.
Life Insurance Corporation, Food Corporation of India and Airport Authority of India are a few examples of statutory corporations in India.