Trouble mounting for CM Pinarayi Vijayan's daughter Veena? ED may file a fresh report in CMRL pay-off case

The Enforcement Directorate (ED) may register a fresh Enforcement Case Information Report (ECIR) based on the Serious Fraud Investigation Office (SFIO) report in the CMRL pay-off case. The ECIR functions almost similarly to a First Information Report (FIR) filed by the police for cognizable offences. However, it is not mandatory to be provided to the accused, as it's treated as an internal document for initiating an investigation.

 

Last week, the Ministry of Corporate Affairs granted permission to prosecute Veena T, daughter of Kerala Chief Minister Pinarayi Vijayan, based on a report submitted by the SFIO to the Special Court for Economic Offences in Kochi. 

According to the SFIO’s findings, Veena and her firm, Exalogic Solutions, received ₹2.73 crore from companies associated with controversial businessman Sasidharan Kartha, without providing any services in return. Veena, Exalogic, Kartha, and Kartha’s firm, Cochin Minerals and Rutile Ltd. (CMRL), have all been charged under Section 447 of the Companies Act, which pertains to financial fraud.

In March 2024, the ED registered an ECIR based on a report by the Income Tax Interim Settlement Board (ITSIB) from August 2023. That report stated that Veena and her company had received ₹1.72 crore from Kartha’s firm, CMRL. At the time the ED registered the ECIR, the SFIO’s investigation was still ongoing.

The ECIR filed by the ED was later challenged in the High Court because there was no predicate offence and the ED’s investigation was not active.

However, sources indicate that the SFIO’s complaint, based on its final report, can now be treated as a predicate offence—enabling the ED to move forward with its investigation. They added that once the ED receives the complaint, it is expected to register a new ECIR and merge it with the existing one.

Last week, as the Ministry of Corporate Affairs granted permission to prosecute Veena, the CPI(M) was holding its Party Congress in Madurai. Chief Minister Pinarayi Vijayan has remained silent on the matter since the SFIO report was submitted to the Special Court. However, the party has stated that it will address the issue through both political and legal channels. It has also alleged that the current developments are part of a broader effort by the BJP-led Union government to discredit opposition leaders using central investigative agencies. 

The first ECIR from the ED noted that the Income Tax search revealed that CMRL had inflated its expenditures by booking bogus cash expenses worth Rs. 133.82 crores between FY 2012-13 and 2018-19 under the heads of transportation and sludge handling, and the funds thus generated in cash were used to make illegal payments to politicians, public servants, and media houses.

The ECIR also noted that, Rs. 1.72 crores were paid to Exalogic Solutions promoted by Veena, without any actual services rendered in return.

"The CMRL being a public listed company with 48.75% public shareholding and 13.41% shareholding by the Kerala State Industrial Development Corporation (KSIDC), the misappropriation of funds amounted to a loss to public and state shareholders. These diversions, done without any legitimate business purpose, reduced the company’s profits and thus harmed the interests of its shareholders. The acts constitute criminal conspiracy and cheating under the Indian Penal Code (IPC), and the proceeds of such crime are being investigated under PMLA," the ED had noted in the ECIR.

India