Ajayan

The CPM and the ruling LDF it heads in Kerala have been steadfastly orchestrating the theory that the involvement of the Enforcement Directorate in the Karuvannur bank scam probe has been a deliberate design of the BJP at the Centrewith the sinister aim of extinguishing the State’s cooperative sector. But the majority refuse to subscribe to this as they are well aware of the precipitation of the crisis and the no small role played by the leadership in it.

In a throwback to 2011, MV Suresh, then a bank employee and CPM local committee member, was brave enough to take up the matter of fraud in the bank with party district secretary Baby John. Although he initiated some preliminary inquiries, the mantle of leadership soon fell on former Minister AC Moideen. Suresh persisted with his efforts and apprised Moideen of the continuing malfeasance. Not only was nothing done, but during the tenure of Moideen, plunderers were further aided, laments Suresh.

He recounts a crucial moment when CPM leader Kadakkampally Surendran was Cooperation Minister before Moideen. During an online programme with Surendran, he broached the topic. The Minister then said it was shocking and expressed lack of knowledge about it. However, he said he would look into the matter and take action. But only the pledges remained and in 2015, the party showed Suresh the door.

A unit inspection report of July 28, 2019, found a series of frauds. Among the transgressions was a case where a cadre of pfficials, including a Rubco agent in the bank, were granted loans to a staggering sum of Rs 14.8 crore. Astonishingly, the aggregate personal liabilities of the individuals was Rs 75.95 lakh when their liability as sureties was Rs 14.09 crore.

According to bank documents over 170 persons were granted loans of Rs 50 lakh each and their cumulative liability was Rs 85 crore which the bank is yet to recover. A report submitted on October 19, 2020, by three officials after an inspection found that there were major breaches in the granting of loans without the customary bonds and even the knowledge or approval of the board of directors.

An inquiry report of two assistant registrars on September 30, 2021, led to issuance of surcharge orders to 25 people who included directors, the secretary, staff and a commission agent. The collective amount of the fraud was around 125 crore. Incidentally, one of the daily wages staff had a relatively modest fine of Rs 4449 for some minor lapse, promptly paid the due and evaded further punitive action.

Even the CPM-appointed commissions, the last being headed by former MP PK Biju, appeared to have turned a blind eye to the real malefactors. Ex-Minister Moideen, Kerala Bank vice-president MK Kannan and apprehended Wadakkancherry municipal councillor PK Aravindakshan are under a cloud of suspicion. These commissions overlooked the genuine culprits which included real estate brokers and mafiamen who operated in the shadows. These operators are now being quizzed by the ED due to unmistakable signs of money laundering.

The modus operandi of the culprits was deceptively simple. Those in debt were approached by these brokers specialized in loan takeovers. However, it was not a conventional bank-to-bank takeover. Instead, the broker would assume responsibility and settle the existing debt for a higher amount and pay the debtor some meagre amount. Subsequently, leveraging a ‘gehan’, a registration proof of genuineness of a document to help transaction, valid for 12 years, the broker would obtain several additional loans. This was on the basis of land valuation, often acknowledged by officials to be markedly inflated. The burden of debts would be on the unsuspecting landowner, who, in almost all cases would remain ignorant of the mounting financial obligations. The broker pays the person a token amount and then based on the land valuation, which officials admit is much higher, several other loans are taken and the burden of debt falls on the land owner, though he or she is unaware of it. In one instance seven loans were secured on the basis of a single gehan. To compound matters, none of these loans has seen any repayment, perpetuating a troubling cycle of indebtedness.

Norms stipulating area limitation for each primary cooperative were brazenly flouted and the brokers, with political patronage, literally ran rampant. The bank had a deposit of around Rs 350 crore when its loan portion far exceeded this. This imbalance violated all norms of capital adequacy ratio. With the bank now under seal and its financial integrity compromised, prospects of depositors reclaiming their hard-earned money appear to be gravely remote, bordering on the verge of impossibility.

Suresh ardently believes that that protective cloak of political patronage shielding these wrongdoers will ultimately be lifted. He is hopeful that the judiciary will respond positively to his petition in the High Court seeking a CBI probe too. This should happen soon, he says. Yet he acknowledges that the failure solely of both the CPM and its Government to take swift action in the Karuvannur case has inflicted damage upon the co-operative movement in Kerala. The director of another bank board in Thrissur and under the CPM admits like LDF convenor EP Jayarajan that the crisis is the result of failure to take timely action.