Thiruvananthapuram, Dec 1 ( LatestNewsX ) – In a move that carries both political weight and financial consequence, the Enforcement Directorate’s Adjudicating Authority has dispatched show‑cause notices to Kerala’s Chief Minister Pinarayi Vijayan, former Finance Minister Dr T.M. Thomas Isaac, KIIFB chief K.M. Abraham and other senior officials. They are accused of violating the Foreign Exchange Management Act (FEMA) in the issuance and usage of Masala Bonds by the Kerala Infrastructure Investment Fund Board.
The Communist Party of India (Marxist) issued an immediate rebuttal, labeling the action a “politically motivated move.”
According to the ED’s initial investigation, the KIIFB breached FEMA regulations in 2019 when it raised ₹2,150 crore through Masala Bonds listed on the London Stock Exchange, offering a 9.72 % yield.
The agency contends that the overseas capital, obtained via external borrowing instruments, was directed toward domestic infrastructure projects, a tactic that contravenes FEMA provisions.
The board’s decision to launch the bond issuance was sealed at a KIIFB meeting chaired by the Chief Minister on January 17, 2019.
Three months ago, the ED handed its final report to the Adjudicating Authority in Chennai, prompting the issuance of the notices last week.
Sources indicate that further action will be taken once the authorities receive explanations from the respondents.
The Delhi‑based Adjudicating Authority will now review the ED’s findings, hear arguments from all four parties, and decide whether FEMA violations were indeed committed. If proven, penalties could reach up to 300 % of the total amount raised.
While there have been rumours about possible arrest proceedings against the Chief Minister, legal experts suggest that such a step is unlikely while the case remains in the adjudication phase. Those who receive notices may reply directly or through their legal counsel.
After the hearings, KIIFB will have the right to appeal any adverse decision before the Appellate Tribunal.
During its three‑year investigation, the ED had summoned Dr Thomas Isaac twice.
Officials close to the case confirmed that KIIFB’s financial documents and procedural approvals were carefully examined before the notices were issued.
This development marks one of the most prominent financial inquiries involving a state‑run agency.
The Adjudicating Authority’s ruling is expected to have wide‑ranging legal, administrative, and political impacts in Kerala, and those who have been served notices have been given 30 days to respond.
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