New Delhi | The Enforcement Directorate has arrested PR Arivandakshan, a CPM Municipal Councillor from Kerala's Wadakkanchery, in connection with the Karuvannur co-operative bank fraud case, officials said Tuesday.

The agency has also arrested a former employee of the bank, CK Jills, who allegedly siphoned off Rs 5 crore bank funds, they said.

Arivandakshan's arrest is the first of a political person in the alleged scam in which several political functionaries of the CPM are under scanner, they said.

The probe in the alleged fraud, beginning in 2010, in the Thrissur-based bank stems from 16 FIRs registered by the Kerala Police (crime branch) in Thrissur.

The ED has said its probe found that "on the instructions of certain persons, who were district-level leaders and committee members of certain political party and governed the bank, loans were disbursed by the bank manager through the agent in cash to non-member benamis by mortgaging properties of poor members without their knowledge and laundered to the benefit of the accused".

"Many such benami loans were disbursed on the instructions of A C Moideen," it had alleged in a statement issued on August 23, a day after the raids were conducted.

Moideen, 67, had told the press that the ED action was "pre-planned," adding he would cooperate in the investigation.

He is a former minister for cooperation and industries and currently represents the Kunnamkulam constituency in the state Assembly.

The ED had first carried out raids in this case in August last year at six locations, including a branch of the bank located in Irinjalakuda, Thrissur. It had attached assets worth Rs 30.70 crore of a commission agent of the bank, Bijoy A K