ED fabricated ₹466 cr figure, KIIFB used ₹66 cr masala bond funds for legitimate land acquisition, says CEO

Thiruvananthapuram: Kerala Infrastructure Investment Fund Board (KIIFB) Chief Executive Officer Dr K M Abraham has strongly refuted the allegations raised by the Enforcement Directorate (ED) in its recent show-cause notice linked to the 2019 masala bond issue. In a detailed statement posted on Facebook, Abraham said the notice issued to Chief Minister Pinarayi Vijayan, former Finance Minister T M Thomas Isaac and himself is based on “factually incorrect” claims and reflects a “disturbing pattern” in the investigation.

Abraham, who along with the Chief Minister and Isaac received the notices on November 28, said the core allegation that KIIFB used ₹466 crore of masala bond proceeds for land purchase is “entirely false”. He argued that the ED had “misrepresented” figures despite having access to audited deployment records.

According to him, KIIFB raised ₹2,150 crore through India’s first sub-sovereign masala bond, listed on the London Stock Exchange, and every rupee was deployed in compliance with the Reserve Bank of India’s External Commercial Borrowing guidelines and FEMA provisions. He said the funds were used for infrastructure projects across key sectors and audited monthly by an independent chartered accountant.

Abraham said the ED’s conclusion stems from a misunderstanding of the difference between land acquisition for public infrastructure and land purchase for investment. “KIIFB has deployed Masala Bond proceeds exclusively for land acquisition as part of infrastructure projects. Not a single rupee has been used for commercial land purchase or real-estate activity,” he said. Abraham added that only about ₹66 crore from the masala bond was used for land acquisition linked to infrastructure projects, and that too was permissible under RBI rules.

The statement also cites the evolution of RBI’s ECB guidelines, arguing that the prohibition on using such funds for land acquisition was removed in 2016, with later updates clarifying that the restriction applied only to commercial real-estate purchases, not acquisition required for public projects.

He accused the agency of “fabricating” a table showing the alleged ₹466 crore utilisation. He added that KIIFB had already submitted the correct figures and supporting documents to the ED in 2022. 

Abraham said independent authorities, including the Comptroller and Auditor General, had earlier recognised the use of masala bond funds for land acquisition in infrastructure projects as legitimate, while reviewing a similar bond issued by the National Highways Authority of India. 

Alleging a pattern of political interference, he said ED actions in 2021, 2024 and now in 2025 coincided with election cycles. “The timing cannot be ignored,” he said, calling the latest move part of a continuing attempt to create adverse publicity ahead of the 2026 Assembly elections.

Abraham further accused the ED of leaking selective portions of the show-cause notice to the media despite its confidentiality. KIIFB, he added, would respond to the notice in accordance with legal procedure.