THIRUVANANTHAPURAM: In a significant development with political and financial implications, the Enforcement Directorate’s (ED) Adjudicating Authority has issued show-cause notices to Kerala Chief Minister Pinarayi Vijayan, former Finance Minister Dr T.M. Thomas Isaac, KIIFB CEO K.M. Abraham and other senior officials over alleged violations of the Foreign Exchange Management Act (FEMA) in the issuance and use of Masala Bonds by the Kerala Infrastructure Investment Fund Board.
The CPI(M) was quick with its response, which said this was nothing but a "politically motivated move".
The ED’s preliminary findings indicate that KIIFB violated FEMA norms in 2019 when it mobilised Rs 2, 150 crore through Masala Bonds listed on the London Stock Exchange at an interest rate of 9.72 per cent.
The probe agency has alleged that funds raised abroad through external borrowing instruments were used for domestic infrastructure projects, which, according to them, constituted a violation of FEMA guidelines.
The decision to proceed with the bond issuance was finalised at a KIIFB Board meeting chaired by the Chief Minister on January 17, 2019.