Thiruvananthapuram: The financial dealings between Ernakulam-based Cochin Minerals And Rutile Ltd (CMRL) and Exalogic Solutions would fall under the Prevention of Money Laundering Act, 2002, the Registrar of Companies (ROC) in Bengaluru has reported to the Central Corporate Affairs Ministry.
The report recommended investigations into the dealings between the two firms by the Enforcement Directorate and the Central Bureau of Investigations. Bengaluru-based Exalogic is owned by Veena T, daughter of Kerala Chief Minister Pinarayi Vijayan.
The ROC further pointed out that Exalogic failed to provide documents supporting its claim that it had accepted money in return for services rendered to CMRL.
Based on a preliminary investigation, the ROC report stated that both firms had committed offences that would invite jail terms and penalties under the Companies Act.
The director-general of corporate affairs ordered a probe into the financial dealings between the two companies the other day based on the Bengaluru ROC's report.
According to available information, the probe order was a prelude to announcing further investigations by the Enforcement Directorate and the CBI.
The chief minister and the CPM had argued that Veena's Exalogic received Rs 1.72 crore for IT services provided to CMRL. They offered the argument when the Income Tax Interim Settlement Board (ITISB) pointed out the payoff.
The party and the chief minister further justified that the ITISB had concluded without hearing Exalogic. However, the ROC report has punched holes in the arguments, pointing out that neither Exalogic nor CMRL provided the relevant documents despite having enough opportunities.
Exalogic, however, explained that it had remitted the GST for the amount received.
Incidentally, CMRL could not produce documents to prove that it had published an advertisement inviting firms to provide IT solutions. Both companies lacked documents to prove any communication between them before or after sealing the deal.
Meanwhile, Kerala Industrial Development Corporation has a stake in the CMRL, and the company must inform the Board of Directors when it enters into a deal with another firm.
However, this norm was not followed in its dealings with Exalogic, and it violates Section 188 (mandating the approval of the Board of Directors) of the Companies Act.
The authorities concerned could charge Exalogic under sections 447 (punishment for fraud) and 448 (penalty for wrong statement) under the Companies Act.
The ROC report validates the Income Tax Interim Settlement Board's finding that though Exalogic was paid, it had not rendered any service to CMRL. The ROC has recommended a comprehensive audit of both firms.