ED raids Kozhikode sites in CMRL payoff case linked to former Kerala CM's daughter
The Enforcement Directorate (ED) on Wednesday carried out searches at eight locations in Kozhikode, Kerala, as part of its ongoing investigation into alleged financial irregularities involving Cochin Minerals and Rutile Limited (CMRL) and Exalogic Solutions, a defunct firm owned by T. Veena, daughter of former Chief Minister Pinarayi Vijayan.
The raids are a follow-up to the search operations conducted on May 27 at Mr. Vijayan's then-rented house at Bakery Junction in Thiruvananthapuram, his ancestral home in Kannur, and the residence of former Public Works Minister P.A. Mohammed Riyas, who is married to Ms. Veena. During those searches, the ED had frozen ₹18.36 crore across 242 bank accounts.
The investigation stems from allegations that CMRL made payments to Exalogic under the guise of IT consultancy services, which the company later admitted as fake expenses before the Income Tax Settlement Commission. The Serious Fraud Investigation Office (SFIO), under the Union Ministry of Corporate Affairs, subsequently launched a probe based on the Income Tax Department's findings. The ED initiated parallel investigations under the Prevention of Money Laundering Act (PMLA).
On May 26, the Kerala High Court dismissed a writ petition filed by CMRL challenging the ED's investigation. The court held that investigations under the PMLA are valid even without a prior predicate offence, observing that a predicate offence existed since the SFIO had filed a prosecution complaint with a scheduled offence under the PMLA.
The SFIO has filed charges of corporate fraud against CMRL Chairman and Managing Director Sasidharan Kartha and 12 others before the Additional Sessions Court – VII, Ernakulam. According to the SFIO, Mr. Kartha and his son received cumulative remuneration of ₹30.63 crore between 2015-16 and 2022-23, despite the company not paying dividends.
The SFIO also alleged that CMRL had recorded fictitious cash expenses totalling ₹182 crore over a 15-year period. It further claimed that the company paid ₹91 crore towards transport services to companies owned by Mr. Kartha's family members.
Specifically, Ms. Veena's company, which was a one-person firm, allegedly received ₹2.78 crore from CMRL for IT consultancy services that were not genuinely rendered. Additionally, Empower India Capital Investment Private Limited (EICPL), operated by Mr. Kartha, allegedly extended loans of ₹50 lakh to Exalogic, despite the latter failing to make timely repayments.
The current raids in Kozhikode are aimed at gathering further evidence related to these transactions. The ED is expected to examine documents and digital records to trace the flow of funds.
Legal experts note that the High Court's ruling reaffirms the applicability of PMLA provisions even in the absence of a prior conviction, as long as a scheduled offence is alleged. The case underscores the scrutiny faced by corporate entities and public figures in matters of financial probity.
Further details are awaited as the investigation progresses.
