The Kerala government suspended 16 officials on August 11, Wednesday, for alleged failures in identifying a loan scam involving over Rs 100 crore at the CPI(M)-controlled Karuvannur Co-Operative bank in Thrissur district. State Cooperative Minister VN Vasavan stated that the decision to take harsh action against 16 officials, including a joint registrar and three assistant registrars, who failed to conduct proper auditing of the scam-hit bank was based on an interim report submitted by the government’s high-level inquiry committee.
The interim report was delivered to the minister on Wednesday night, he said. The decision to suspend the officials, the majority of whom worked for the state cooperative agency, was made during a meeting of top authorities presided over by the minister. Vasavan told PTI that the theft at the Karuvannur cooperative bank began in 2010 and persisted throughout the governments of both the Congress-led United Democratic Front and the CPI(M)-led Left Democratic Front.
Money transactions including false signatures, borrowing money in the name of clients who were not aware of it, Benami transactions, and remortgaged homes were all part of the $100 million fraud. The fraud was revealed after TM Mukundan, a 63-year-old man, committed suicide after getting a foreclosure notice for money he had never borrowed. Mukundan was a former Porathissery panchayat member. The fraud was discovered in 2019 when the joint registrar of cooperation (Thrissur) launched an investigation. The investigation was concluded in October 2020, but no action was taken.
The minister also stated that if the role of any retired officials is discovered during the investigation, they will be investigated as well. The government stated in the suspension decision that the inquiry committee reported that the bank’s audit is under the jurisdiction of the Thrissur District Joint Director (Audit), but that no meaningful audit examinations of the bank’s accounts have been carried out by the officials responsible since 2014.
The preliminary investigation discovered that the auditors and authorities involved failed to flag severe financial irregularities occurring in the bank. Meanwhile, the Kerala Police’s Crime Branch arrested two additional people in connection with the multi-billion-dollar scam on Wednesday, according to a police officer in Thrissur. He informed PTI that the second and third accused, who were apprehended today, are suspended bank workers.
On Monday, the Crime Branch apprehended the main suspect in the scheme. According to authorities, there are six people charged in the crime, and an investigation is underway to apprehend three more. After the swindle was discovered, police filed charges against six bank personnel and initiated an investigation. After multiple people, including local customers, expressed concerns about the bank’s operations, an audit was recently undertaken, and the claims were purportedly confirmed to be genuine.
During the inspection, it was also discovered that loans were sanctioned on property pledged by local customers without their knowledge, and the loan amount was credited to the selected accounts many times. The case was filed against bank officials, including the bank’s secretary, who had already been suspended as a result of the claims.