(This is part two of the series uncovering the Karuvannur Co-operative bank fraud. For part one, click here)
Chief Minister Pinarayi Vijayan has reiterated that his party, CPM, does not have a culture of covering up mistakes. What happened in Karuvannur was not a cover-up but blatant protection and patronage of the guilty.
June 30 was a big day for the Karuvannur Co-operative Bank. The powerful secretary of the bank, who presided over the cooperative institutions in the days when a huge scam of Rs 300 crore unravelled, retired that day. The powerful secretary was the subject of many a complaint received by the cooperation department pointing to his involvement in the scam. He was never subjected to an inquiry.
He only had to make himself less visible when the investors turned up in groups to protest. He was still putting his signature in documents as the secretary. He was given a grand farewell by his colleagues and comrades. He retired with all the benefits. The police then filed a case against him. He is the prime accused in the case. Not so much of a coincidence.
When the cooperation department dismissed the tainted administrative committee of the bank and appointed an administrator, people were in for a surprise. The person appointed to set right the wrongs was the same man who served as an assistant registrar in Mukundapuram taluk for the past four years. He was in charge of the audit of the bank when it was going through an outrageous scam. There were many red flags in each audit but the officer could not bother.
Ironically, the audit report, made public through a Right to Information application, became the basis of a petition to the assistant registrar which launched an official investigation two years ago.
The 30-page report that chronicled the scam was submitted to the assistant registrar in July 2019 but the document never saw the light of the day. The same officer also sat over a more detailed 85-page report prepared by three inspectors in June 2020. He never tried to pinpoint the suspects or to salvage the bank. Nevertheless, he managed to get instituted as the administrator to replace the disgraced administrative committee.
The second accused, M K Biju, a former office-bearer of the CPM’s Porathisseri local committee, served as the manager of the Karuvannur Cooperative Bank for 16 years. According to the audit reports, Biju has embezzled Rs 26 crore from the bank using various aliases. He granted 379 loans to people close to him disregarding all norms. Though his role in the scam was evident, he managed to keep his job until 2019 when he was suspended.
The first inquiry report into the scam was shelved by the CPM in a clear indication of the influence of the people involved in it. Had action been taken a few years ago when irregularities of Rs 3 crore were flagged, the bank could have avoided the disgrace of the Rs 300 crore scam. The same person who tested the waters by pilfering Rs 3 crore presided over a racket that embezzled Rs 300 crore.
The first signs of corruption in the cooperative bank came out when A C Moideen was serving as the district secretary of the CPM. Moideen received a complaint from a local committee member of the party, Suresh, who was an employee of the bank. Moideen entrusted two members of the district secretariat to inquiry about the allegation. The report went to the back burner.
When Moideen became the state minister for cooperation, the district leadership of the party received another complaint about the bank. The party chose to ignore that one, without bothering to investigate the matter, take corrective measures or at least revive the earlier report. The person who complained lost his job in the bank. His party membership was not renewed. The complaint was primarily against Biju, who turned out to be the mastermind of the loot.
The CPM was forced to form another inquiry commission when it could no longer ignore the increasing number of complaints. Yet the commission was silent on the original complaint or the commission it led to.
The chief minister said that the party has maintained its credibility by correcting every mistake it spotted. Maybe he was being honest. He may not have been aware of the rot, but the party definitely was. The party received the first complaint about the corruption in the bank as early as 2003. Another complaint with a stronger body of evidence followed in 2010. No action was taken.
Biju and fellow accused C K Jills were partners. Both of them had their wives start a supermarket, which was inaugurated by minister Moideen more than a year ago. The minister courted controversy by sharing the dais with Biju. Biju was already a controversial figure with allegations of corruption levelled against him.
At the meeting, Biju is alleged to have threatened to kill a branch committee secretary who had fought against him within the party. This allegedly happened after the minister had left. The party leaders got into action to cover up the complaint.
The scam accused are suspected to have invested the embezzled funds in a raft of companies. Biju and commission agent Bijoy are among the eight directors of Thekkady Resorts Limited. The resort has been guaranteed an investment of Rs 10.49 crore. Works on the resort were suspended two years ago.
Biju, Bijoy and their family members are also on the director board of the Rs 50 lakh Munnar Luxury Hotels and Resorts Limited. Biju and Bijoy are among the four directors of the Rs 98 lakh Peso Infrastructures Limited.
Another entity that has come under a cloud is the CCM Traders Private Limited, which has Biju’s wife as well as accountant Jills’s wife among the directors. The company has an investment of Rs 10 lakh.
Meanwhile, the victims of the scams are too scared to speak out. “Please do not publish my photo or personal details. I have to live with these people,” said a person in Irinjalakuda who had been told that he owes the cooperative bank Rs 75 lakh. He is more concerned about the repercussions of lodging a complaint against the influential scamsters.
He had borrowed Rs 25 lakh for house construction and other expenses from the cooperative bank four years ago. He paid all the repayment instalments without fail for two years. Then he went into a financial crunch which made it difficult for him to continue repayment. He said he had been receiving reminders from the bank but he could not fathom the debt trap he was getting into because the letters did not mention the liability amount.
He was crestfallen when two employees of the bank visited him last week to tell him that he owed the bank Rs 50 lakh in principal and Rs 25 lakh in interest. He told them he had borrowed only Rs 25 lakh but they would not listen. He is on the verge of losing his house to the bank.
Kerala State Cooperative Society Registrar P B Nooh said that nobody will be held liable for a loan they have not taken from the Karuvannur bank. He said that the administration will take legal action to punish the perpetrators of the scam and recover the money from them.
Several teams have been formed to inquire into the irregularities at various levels. Three assistant registrars are leading the investigation. The Thrissur joint registrar is coordinating the investigation at the district level.
Nooh also said that a special team has been formed at the state-level office under additional registrars for better coordination. He has already gone to the Thrissur district registrar’s office to ascertain the facts.
The interventions have done little to assuage the woes of the depositors. Joy and son Noble from Puthanangadi have been taking turns to go to the Karuvannur bank almost every day to ask about the Rs 10 lakh they had deposited there.
A depositor can withdraw only Rs 10,000 from the bank in a single day whatever be his account balance. To make matters worse, only the first 30 customers are allowed to withdraw money. Even if Joy or Noble reach the bank before 8.30 am, they would be greeted by about 50 people lining up to transact with the bank. If they persisted until noon, they might expect to withdraw Rs 10,000. Still, they do so every day for fear of losing the money kept in the disgraced bank.
Former minister Moideen, meanwhile, issued a statement dissociating with second accused Biju. “I don’t know who Biju is. If any of my relatives are involved in the case, I am ready to accept any disciplinary measures as decided by the government,” he said.
(To be continued…)