New Delhi/Thiruvananthapuram | The Enforcement Directorate has issued a Rs 467-crore FEMA contravention show cause notice to Kerala Chief Minister Pinarayi Vijayan, former finance minister Thomas Issac, and the CM's chief principal secretary K M Abraham in the KIIFB Masala Bond case, officials said on Monday.
The notice was issued on November 12 by the designated ED Adjudicating Authority established under the Foreign Exchange Management Act (FEMA), they said.
The notice pertains to the alleged contravention of FEMA provisions and the RBI master direction by the Kerala Infrastructure Investment Fund Board (KIIFB) and its authorities, amounting to Rs 466.91 crore, they said.
The notices have been issued to Vijayan, 80, in his capacity as KIIFB chairman, former Kerala finance minister Issac, as the board's vice chairman, and Abraham, in his role as the KIIFB CEO, in addition to the institution itself.
The state has, in the past, denied any wrongdoing in this case.
The KIIFB is a body corporate which floated a 'Masala Bond' at the London and Singapore stock exchanges to raise funds through Rupee-denominated bonds to the tune of Rs 2,672.80 crore under ECB (external commercial borrowing) in 2019, ED officials said.
The state government did so to create infrastructure following the devastating floods that hit the state in 2018.
A part of the funds -- to the tune of Rs 466.91 crore -- was used for purchasing land which was "specifically prohibited", and this was in contravention of the master direction and circular issued by the Reserve Bank of India (RBI), officials said.
The ED filed the FEMA complaint in this case on June 27 this year.
A show cause notice, under FEMA, is issued, and the contravention quantified in it is akin to a penalty.
The ED probe went into the end-use of Rs 2,000 crore raised by KIIFB through masala bonds, and its compliance with the FEMA norms.
The KIIFB is the primary agency of the Kerala government for financing large and critical infrastructure projects, and it had raised Rs 2,150 crore through the said debut masala bond issue as part of its plan to mobilise Rs 50,000 crore to fund large and critical infrastructure projects in the state.