Thrissur: The CPM-controlled Karuvannur Service Cooperative Bank is sitting on illegal loans worth Rs 343 crore extended to 90 borrowers, said the Directorate of Enforcement (ED), putting a ballpark figure to the scam that is threatening to bog down the cooperative sector in Kerala.
All the 90 borrowers are being considered as "receivers of proceeds of crime and many of them are benamis of high-profile individuals", said Prashant Kumar, Deputy Director, Directorate of Enforcement, Kochi Zonal Office.
ED's estimate of Rs 343 crore is based on the list of defaulters as of December 31, 2022, shared with the agency by the cooperative society's secretary in-charge Sreekala E S. It is three times bigger than the estimate of the Deputy Registrar of Cooperative Societies in Thrissur district. The officer sought to recover only Rs 113 crore from the bank's 20 former directors and three former employees -- namely the then secretary Sunil Kumar T R, the then manager Biju M Kareem, and accountant Jilse C K.
Recently, P K Chandrasekaran, the chairman of the administrative committee appointed by the government to run the besieged bank, told Onmanorama that the society had a loan outstanding of Rs 514 crore but only Rs 103 crore of it was bad loans.
Despite a threefold jump in the scam size, ED's estimate of Rs 343 crore could be a conservative figure because the list does not include insiders such as Jilse C K, the bank's accountant accused of swindling Rs 5 crore. He took nine illegal loans in the name of his friends and relatives by mortgaging two properties. According to the ED's provisional attachment order, 14 defaulters- who had taken similar illegal loans of more than Rs 5 crore- cumulatively owe the bank Rs 240.73 crore, or 70% of the total bad loans.
Thirty-six defaulters- who owe the bank Rs 1 crore to Rs 5 crore- have a total outstanding of Rs 80.67 crore. The remaining 40 defaulters owe the bank around Rs 22 crore.
In almost all the cases, the bank gave the loans in cash to the borrowers and they parked the money in real estate in the names of their relatives or benamis, said the ED in its attachment report dated October 13, 2023.
Properties of 35 persons attached
The Directorate of Enforcement has proceeded to attach the immovable and movable properties worth Rs 57.83 crore of 35 persons in connection with the scam, the report said.
The 35 persons are relatives or friends of 13 borrowers, who owe around Rs 111 crore to the bank, found Onmanorama's analysis of the report. The Deputy Director ordered the attachment under the Prevention of Money Laundering Act (PMLA).
The biggest defaulter of the bank is Bijoy A K, a former commission agent of the bank. He owed Rs 85.06 crore to the bank as of December 31, 2022. Almost all the loans given to him were unsecured.
ED attached his assets worth Rs 30.7 lakh on December 6, 2022. The assets included a resort in Thekkady, five plots, two luxury cars, and Rs 35.87 lakh in Indian and foreign currencies in 57 bank accounts. In the list of defaulters, Bijoy is followed by Kiran P P, a real estate agent who resides outside the jurisdiction of the bank. Kiran, the second accused in the case, owes Rs 48 crore to the bank. His assets are not yet attached.
The third biggest defaulter is Anil Kumar K B, a real estate player, who was given 23 loans in 2014, 2015, 2017, and 2018. He owes the cooperative society Rs 18.94 crore. The illegal loans were sanctioned based solely on reports by the then manager Biju M Kareem.
The bye-law of the bank restricted the maximum loan amount to Rs 50 lakh. The members and employees of the society circumvented the rule by bringing in friends and relatives as benamis. These loans were sanctioned by mortgaging and remortgaging a single property which are often over-valued, said the ED report.
The ED in its report said that the illegal loans were "sanctioned and controlled by a political sub-committee and parliamentary committee of the CPM, which maintained a separate minutes" for loans sanctioned.
This was reportedly told to the ED by the then manager Biju Kareem and the then secretary Sunil Kumar T R when they were questioned on September 1, 2023.
Speaking to Onmanorama in the first week of October, the former director of the bank E C Antu said the political committee was headed by CPM's District Secretariat member C K Chandran, a leader close to CPM's state committee member and former Minister for Cooperation A C Moideen. The other members of the committee were the secretaries of two local committees of the CPM in Irinjalakuda A R Peethambaran and M P Raju, bank president K K Divakaran, secretary (who was then Sunil Kumar T R) and the board director from Porathissery ward. Every policy decision that came before the Board of Directors would be cleared by the political committee, he said. "The board of directors was a rubber stamp," he said.
The ED has made four arrests in the case. Private financier Satheesh Kumar P (54), Kiran P P (33), CPM's Wadakkanchery municipal councillor Aravindakshan P R (56), a confidant of CPM leader A C Moideen, and accountant Jilse C K (45) were arrested and remanded in custody in September.
