Sharjah NRI's dream college in Kasaragod under ED scanner for ₹220 cr foreign funding violations

Kasaragod: The Directorate of Enforcement has launched an investigation into an NRI's educational trust in Kasaragod for allegedly breaching the country's foreign exchange and foreign contribution laws.

According to a statement issued by the agency, the Kunhahmed Musliyar Memorial Trust -- which runs Kuniya College of Arts and Science -- received ₹220 crore since 2021 from its UAE-based chairman, industrialist Ibrahim Ahmad Ali. However, the trust is neither registered under the Foreign Contribution Regulation Act (FCRA), 2010, nor does it hold the mandatory permission from the Union Home Ministry or maintain a designated FCRA bank account to receive funds from abroad.

A director of the trust, when contacted, said FCRA registration was not required as the trust had not solicited public donations. The money, he said, came from Ibrahim Ahmad Ali’s personal wealth to help build a world-class educational institute in his native village, Kuniya, near Periya. But the ED contends the claim does not stand up to legal scrutiny.

On July 31, officials from the agency’s Kochi zonal office conducted searches at two premises linked to the trust in Kasaragod. Investigators say they found the trust had received ₹220 crore over the past four years, with the funds recorded in the books as "unsecured loans". However, there were no loan agreements, interest terms or repayment schedules, and no repayments had been made so far.

The ED further noted that Ibrahim Ahmad Ali had routed the money from his UAE-registered firm, Universal Lubricants LLC.

Ali, originally from Kuniya village in Kasaragod, built a successful business empire in the Gulf's petroleum and lubricant sector. He set up the Kunhahmed Musliyar Memorial Trust with a focus on education, and in 2023, launched the Kuniya College of Arts and Sciences on a 100-acre campus in his hometown.

The campus has a distinctive aesthetic, with sprawling whitewashed buildings marked by large domes, arched corridors and symmetrical colonnades -- drawing heavily from Islamic architectural traditions while reinterpreting them for a contemporary academic setting. Inside, the college features stylish furniture and air-conditioned classrooms designed to match its upscale exterior.

Affiliated to Kannur University, the institution currently offers seven undergraduate programmes -- in English, Arabic and Islamic History, Economics, Social Work, Commerce, Psychology, and Business Administration, with a specialisation in Aviation and Hospitality. Each of these courses is integrated with civil services coaching, positioning the college as both a degree-granting institution and an IAS training hub.

Despite the philanthropic intent, ED officials say the manner of funding violates key provisions of both the Foreign Exchange Management Act (FEMA), 1999, and the FCRA. Part of the foreign funds was allegedly used to purchase agricultural land in India -- a move that runs afoul of existing FEMA regulations, said ED. The agency also found the trust received ₹2.49 crore in cash from Ali, which it says further contravenes FEMA provisions.

Under Section 2(1)(h) of the FCRA, any donation, transfer or delivery of currency from a foreign source -- including non-resident Indians -- qualifies as a foreign contribution. As per Section 11 of the Act, any organisation engaged in educational, cultural, religious, social or economic activities must either register under the FCRA or obtain prior approval from the Home Ministry before accepting foreign funds. The trust did neither, the ED said, making the entire ₹220 crore inflow, on the face of it, unlawful.

During the searches, the ED seized ledger accounts reflecting the unsecured loans, a cash book, and a hard drive containing financial records. Further investigation is underway.

Officials said if the money was indeed intended as a philanthropic donation or endowment, it should have been declared transparently, supported by proper documentation, and channelled through authorised FCRA routes. If the intention was to treat it as a loan, then formal agreements and clearance from the Reserve Bank of India would have been necessary, especially for cross-border lending under FEMA.

The trust's director said a formal reply to the ED was being finalised, and maintained that the organisation had done nothing wrong.