Kerala serious fraud probe has 'broad scope'

The probe by the Serious Fraud Investigation Office (SFIO) was announced by the Central government last month. (Mint)
The probe by the Serious Fraud Investigation Office (SFIO) was announced by the Central government last month. (Mint)

Summary

  • The investigation into the affairs of two private firms and a state public sector enterprise is likely to get bigger

New Delhi: A probe by the Serious Fraud Investigation Office (SFIO) into the affairs of two private firms and a state public sector enterprise that has snowballed into a political storm is likely to get bigger.

The investigation order into Cochin Minerals and Rutile Ltd (CMRL), Exalogic Solutions Pvt Ltd and Kerala State Industrial Development Corp. has a “broad scope" and will look into alleged illegal payments made to political functionaries, influential persons, government servants and media houses, a person informed about the investigation order said.

That 31 January order was based on an interim report by the Registrar of Companies, Bengaluru. It referred to alleged illegal payments by CMRL, a company engaged in sourcing of ilmenite, to “various political functionaries and entities". Payments of 135 crore were “made to influential persons, state government functionaries, government servants, media houses etc…" the person said, quoting from the order. The broad scope of the investigation has not previously been reported.

P. Rajeev, Kerala’s minister for law, industries and coir, told Mint that KSIDC, a state agency that promotes industrial development in the state with term loans and equity support, will respond to the allegations.

A person informed about KSIDC’s functioning told Mint on condition of anonymity, “KSIDC has moved the Kerala High Court. To promote industry in the state, KSIDC has invested in over 200 companies. Of those, 76 companies are active now. CMRL is one of them. KSIDC does not involve itself in their day-to-day management and if a manager in any of those companies commits a breach, KSIDC has nothing to do with that. KSIDC has filed a writ petition in the Kerala High Court seeking to be excluded from the investigation." The state agency has a 13.4% stake in CMRL.

One of the transactions the SFIO will look into is a contract that CMRL had with Exalogic Solutions Pvt Ltd, a one-person company founded by Veena T, daughter of Kerala Chief Minister Pinarayi Vijayan. On 16 February, the Karnataka High Court rejected a petition from Exalogic Solutions challenging the SFIO probe, according to a copy of the order seen by Mint.

“The transaction between Exalogic Solutions and CMRL was an old software contract. The amount is very small, unlike cases probed by SFIO in the past involving multiple crores," a person informed about the transaction between the two companies said on condition of anonymity.

The SFIO probe order mentions the transaction between the two companies to be of 1.72 crore.

Emails sent to the Chief Minister of Kerala and CMRL on 7 February and on 15 February, as well as to the spokesperson for Union finance and corporate affairs ministries and KSIDC on 15 February and to Exalogic Solutions on Sunday seeking comments for the story remained unanswered at the time of publishing.

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