Thiruvananthapuram | KIIFB CEO K M Abraham on Monday clarified on the notice served by the ED in the Masala Bond case and said the board has not violated any provision of FEMA or any other law.
The allegations in the Enforcement Directorate's show cause notice are based on false figures, misrepresentation of facts, and a flawed understanding of applicable regulations, he said in a Facebook post.
"As CEO, I wish to state categorically and unequivocally that KIIFB has not violated any provision of FEMA or any other law. The deployment of Masala Bond proceeds has been lawful, proper, and in service of Kerala's infrastructure development," Abraham said.
Earlier in the day, the ED officials confirmed that show cause notices were served to Kerala Chief Minister Pinarayi Vijayan, former finance minister T M Thomas Issac and the CM's chief principal secretary and Kerala Infrastructure Investment Fund Board CEO Abraham in the Masala Bond case.
The notice, which does not require a personal appearance, was issued about 10-12 days ago by the federal probe agency under the provisions of the Foreign Exchange Management Act (FEMA).
Abraham said the ED notices to the CM, Isaac and himself pertain to the deployment of funds from KIIFB's Masala Bond issued in 2019, specifically alleging violations of the FEMA in the use of Rs 466 crore for land purchase.
The deployment of these funds has been carried out in strict compliance with all applicable regulations, including the Reserve Bank of India's External Commercial Borrowing (ECB) guidelines and FEMA provisions as applicable from time to time, he claimed.
"Every rupee has been accounted for, audited, and deployed for legitimate infrastructure development," he said.
Abraham alleged that the ED in its show cause notice conveniently ignores the fact that land acquisition is not an activity prohibited under the applicable directions of RBI under FEMA.
Stating that the Masala Bond issue itself was a landmark achievement, he said the KIIFB will file a comprehensive and detailed response to the show cause notice, addressing every allegation with documentary evidence and legal analysis.
"All deployment of Masala Bond proceeds has been in strict compliance with FEMA and RBI's ECB guidelines as they stood in 2019," he said.
The distinction between land acquisition for public infrastructure and commercial land purchase is legally valid and recognised by authorities, including the CAG, he said.
The official said that Rs 466 crore as alleged by the ED for land purchase was completely false.
The actual deployment for land acquisition was only Rs 66 crore, all for legitimate infrastructure purposes, he further said.
"Not a single rupee of Masala Bond proceeds has been used for any purpose that violates FEMA provisions or RBI guidelines," he added.
Stating that KIIFB stands ready to face any legitimate scrutiny, he said there is nothing to hide and everything to defend.
"These baseless allegations will be countered through all available legal forums to establish the truth through documentary evidence and legal argument. And we will continue, undeterred, with KIIFB's mission of building a modern, prosperous Kerala," he said.
The official said motivated investigations would not be allowed based on false allegations to derail the state's progress.
"This statement is issued in the interest of transparency, to correct the false narrative being created through selective media leaks, and to reaffirm KIIFB's commitment to lawful and transparent functioning," he added in the FB post.
ED sources said the show cause notice is issued after the end of the investigation in a FEMA investigation, and the contravention quantified in it is akin to a penalty.
The probe is related to the end-use of Rs 2,000 crore raised by KIIFB through masala bonds, and its compliance with the FEMA norms.
KIIFB is the primary agency of the state government for financing large and critical infrastructure projects and had raised Rs 2,150 crore in 2019 through its 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.
