Karuvannur scam: Special court finds prima facie case against CPM leaders, 25 others

Ernakulam: In a significant development in the Karuvannur Cooperative Bank loan fraud case, the Special PMLA Court in Ernakulam has held that there is prima facie evidence against the CPM and three of its former Thrissur district secretaries -- A C Moideen, MLA, K Radhakrishnan, MP, and M M Varghese -- of knowingly assisting in laundering money.

The court also found a prima facie case against 25 other accused named in the Enforcement Directorate's supplementary prosecution complaint. The order was passed by Special Judge P Sabarinathan after hearing the accused under Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita (BNSS).

Proceedings had already been initiated against 55 accused earlier. With the supplementary complaint, the total number of accused in the case has risen to 83.

The court's order follows extensive arguments on the ED's supplementary prosecution complaint filed last year, said Special Public Prosecutor M J Santhosh, who appeared for the ED.

ED's case against CPM
The ED argued that the CPM, the 68th accused in the case, committed two major offences. First, when irregularities allegedly began at the Karuvannur Cooperative Bank around 2012-2013, the CPM-led district leadership constituted a sub-committee to oversee and control the bank's governing body.

The committee reportedly included senior party leaders such as former Thrissur district secretariat member C K Chandran. According to the ED, the sub-committee pressured the bank's management to sanction large loans to ineligible borrowers. Many of these loans were allegedly not repaid, resulting in losses to depositors and wrongful loss to the bank.

Second, the ED alleged that in 2017, the party decided to purchase land and construct a party office at Porathissery. To raise funds, a bank account titled "CPM PRY Building Fund" was opened at Karuvannur Bank on December 16, 2017, when K Radhakrishnan was the district secretary. The prosecution alleges that commissions collected from beneficiaries of illegal loans were deposited into this account through the involvement of bank officials, governing body members and borrowers.

The money was later allegedly used to purchase land in the name of M M Varghese, who succeeded Radhakrishnan as district secretary, for the construction of the party office.

The ED contends that by accepting and using money allegedly generated through illegal loans, the party became a beneficiary of the proceeds of crime.

Allegations against leaders
A C Moideen, while serving as Thrissur district secretary, was responsible for appointing the sub-committee to oversee the bank and allegedly directed the governing body to sanction irregular loans, according to the prosecution.

K Radhakrishnan, during his tenure as district secretary, allegedly approved the opening of the building fund account and the collection of funds linked to illegal loans, the ED alleged. M M Varghese, who later became district secretary, allegedly facilitated the purchase of land in his name using funds deposited in the party account.

The ED has also alleged that Satheesh Kumar, using his political influence, helped a 25-year-old borrower named Kiran P P obtain illegal loans worth ₹24 crore, of which ₹14 crore allegedly went to Satheesh Kumar.

Former Wadakkanchery councillors Aravindakshan and Madhu Ambalapuram have been accused of knowingly assisting in laundering the proceeds of crime. Kiran, a member of the cooperative bank, is the second accused in the case. 

R Peethambaran, secretary of the Porathissery North Local Committee, M B Raju, secretary of the Porathissery South Local Committee, and K C Premarajan, secretary of the Irinjalakuda Area Committee, have also been arraigned as accused. The ED has also charged them with knowingly assisting, or knowingly being parties to, the process of money laundering.

Evidence relied upon
The prosecution has relied on witness statements, approvers' statements, alleged confession statements written in the accused persons' own handwriting, bank account records and other documentary evidence. The charge sheets together run to more than 30,000 pages.

The prosecution also argued that, unlike many other laws, the PMLA permits confession statements to be used as evidence against the person making them as well as co-accused facing trial in the same case. It further contended that once the prosecution alleges that certain assets are proceeds of crime, the burden shifts to the accused to show otherwise.

After hearing extensive arguments, the court concluded that there was sufficient prima facie material against the accused and ordered the issuance of a summons. The accused will have to appear before the court and seek bail.

'Bank primary victim, not depositors'
The ED informed the court that it had attached assets worth about ₹130 crore, including cash, gold, vehicles and properties, in the case. Although the Karuvannur Bank is entitled to seek release of the attached assets for compensating depositors, it has not yet filed an application before the court.

The ED stated that it is willing to release the attached assets to the bank, but the bank has not come forward to accept them. Several depositors have approached the court seeking relief, but the legal hurdle is that the bank is considered the primary victim. The ED pointed out that in a similar case involving the Kandala Cooperative Bank, the bank approached the High Court and secured the release of the attached assets.

The accused also argued that several persons named as accused in the ED case have not been arrayed as accused in the Crime Branch investigation. ED prosecutor Adv M J Santhosh said that despite a Kerala High Court direction for a comprehensive probe against politicians and others named in the case, there has been little visible progress in the Crime Branch investigation so far.