Thrissur: A major banking fraud has been reported from a cooperative bank run by a Left Democratic Front panel in Kerala's Thrissur district. As per initial estimates more than Rs 300 crore is involved in the scam perpetrated by the managing body of the Karuvannur Cooperative Bank in Irinjalakuda area.
Loans worth crores of rupees were advanced by the bank to the scamsters, but the loans were taken in the name of party members without their knowledge.
The loans were taken with the silent nod of CPM leaders, it is alleged.
Officials reached a preliminary assessment about the extent of fraud after compiling the reports submitted by the Cooperative department to the joint registrar and the complaints filed by the clients.
It has been found that one of the main accused in the case, former manager M K Biju, took the initiative to pass 379 loans.
The bank documents have been seized by the Irinjalakuda police. However, no action has been taken to arrest the accused in the case yet.
No action has been taken yet to dissolve the bank's governing council.
The Crime branch has taken up the case now.
Six booked initially
Earlier, Irinjalakuda police had registered cases against six persons including the bank's former secretary and manager on a complaint pertaining to Rs 120 crore fraud. According to preliminary findings of the Cooperative department, the accused had committed a fraud which was three times bigger than the amount mentioned in the earlier complaint.
It is alleged that intervention was made at the high level to cover up the fraud using political influence.
Liability for innocent bank members
The scamsters initially advanced a loan of Rs 50,000 to the account of the members. Subsequently, loans worth Rs 50 lakh each were taken by the former after obtaining the latter's signatures on the documents. The duped members of the bank too are LDF followers. As the scam came to light they are now caught in a debt trap.
Among the victims six are headload workers and autorickshaw drivers affiliated to the CPM's labour union, CITU. They had informed the CPM leadership in Irinjalakuda about the hefty loans taken in their names.
District leaders of CPM under a cloud
The bank affairs were controlled by some leaders who are in the CPM's Thrissur district secretariat. Strangely though the party's Iranjalakuda area committee neither discussed the issue nor informed the district committee about the matter even once. Subsequently, when the district leadership came to know about the matter it directed the local leaders to settle the issue at their level.
Some reports say loans worth Rs 100 crore were taken even after the matter came to the notice of the party.
The CPM also took a couple of decisions which helped the fraudsters. Besides deputing party comrades for audit, only party's 'own people' were placed in crucial posts at the cooperative registrar's offices which are responsible for detecting fraud.
The fraud could have been easily detected had the auditors flagged the multiple loan advances to the same people and releasing huge amounts as loans without the required collateral. Moreover, the bank operations would be hit if the loan-to-deposit ratio gets derailed and if the reserve money is exhausted.
As per the norm the governing council of the bank should be apprised about large loans. The members of the council now claim that the loans were disbursed without their knowledge!
According to available information the governing council comprising CPM leaders had clear understanding about the wrongdoings.