Thiruvananthapuram | Keralam Chief Minister V D Satheesan on Tuesday said all alleged irregularities in the functioning of the KIIFB, including those involving land acquisition, borrowings and expenditure, will be investigated.
Replying to discussion on Supplementary Demands of Grants in the State Assembly, Satheesan said the expert committee report on Kerala Infrastructure Investment Fund Board (KIIFB) had raised serious concerns about its functioning and the financial burden it had placed on the state.
"All irregularities involving public money will be investigated. There should be no doubt about that," he said.
Satheesan also warned that a detailed audit by the Comptroller and Auditor General (CAG) into KIIFB's functioning could land several people in jail.
The Chief Minister alleged that KIIFB had functioned as a separate entity, bypassing the Finance Department and other government controls, while borrowing money at higher interest rates and creating huge liabilities for the state.
He said then Finance Minister K N Balagopal had opposed providing sovereign guarantees for KIIFB's borrowings in 2022, but a meeting chaired by the then chief minister decided to provide the guarantees by bypassing the department.
"The Finance Department has been reduced to a mere spectator in KIIFB's affairs," Satheesan said.
He questioned the need for the state to transfer thousands of crores of rupees from the Consolidated Fund to KIIFB every year and also guarantee its loans, while the agency borrowed at higher interest rates than the government.
Satheesan said the expert committee had estimated that projects implemented through KIIFB had resulted in excess expenditure of around Rs 13,103 crore compared with the cost of executing the same works through government departments.
He said the state could have saved the amount if departments such as the Public Works Department and the Irrigation Department had implemented the projects directly.
The Chief Minister also questioned KIIFB's expenditure on publicity. He said its accounts showed Rs 21.16 crore as advertising and promotion expenses for 2025-26, while the audited figure was Rs 203.72 crore.
He alleged that money borrowed at high interest rates had been spent on advertising, raising questions about financial accountability.
Satheesan also raised concerns over land acquisition in Kannur, where around 1,000 acres had been acquired, and a further 4,000 acres were proposed to be acquired.
He questioned the purpose of acquiring such large tracts of land at high prices when only a small portion had been put to use.
The land had been acquired at several times its actual value, he alleged, adding that its present value was far lower than the amount spent on it.
The Chief Minister said the government would examine the land acquisition process and the decisions behind it.
"Every irregularity involving public money will be examined," he said.
Satheesan said the committee had also flagged concerns over payments to consultancy firms, appointments and salary revisions made without the Finance Department's approval, and KIIFB's borrowing practices.
He alleged that the agency had become an independent empire without sufficient accountability to the government.
The Chief Minister said KIIFB's liabilities would ultimately fall on the state government because the loans had been guaranteed by it. Even if the Supreme Court allowed the state additional borrowing space, the financial burden created by KIIFB would remain a concern, he said.
He said the government would examine the expert committee's recommendations, including restructuring KIIFB's liabilities and reducing its interest burden.
The expert committee, headed by retired IAS officer Sudha Pillai, reviewed KIIFB's functioning over the 10-year period from 2016-17 to 2025-26.
Its report, tabled in the Assembly earlier this month, raised concerns about borrowing costs, land acquisition, expenditure and governance, and recommended major changes to KIIFB's role as a financing agency.
