The Enforcement Directorate (ED) has summoned Veena Thaikandiyil, daughter of former Kerala Chief Minister Pinarayi Vijayan, in connection with alleged fraudulent payments involving her IT firm Exalogic Solutions and mineral processing firm Cochin Minerals and Rutile Limited (CMRL). Though Veena cited health issues and sought postponement of questioning last week, the ED issued fresh summons for her to appear on Wednesday, June 17.
The ED probe had created a huge political uproar in the last week of May when Communist Party of India (Marxist) [CPI(M)] members attacked the vehicle carrying the investigating officers following a search at the residence of Pinarayi Vijayan in Thiruvananthapuram, where his family, including daughter Veena, was staying.
The ED is investigating charges that Veena, as director of the now-defunct Exalogic Solutions Private Limited, colluded with CMRL MD Sasidharan Kartha to syphon off Rs 2.78 crore from the CMRL under the guise of Information Technology (IT) consultancy services. The case, initially investigated by the Income Tax (I-T) Department and Serious Fraud Investigation Office, was taken up by ED in 2024.
CPI(M) leaders have alleged that Veena has been targeted for her father’s politics, and the money she received was through a bank transfer for the service she and her firm rendered for CMRL.
It began with the Income Tax Department searching the offices and residences of key CMRL management in January 2019. The tax department says it found fictitious deals worth around Rs 135.54 crore. Among such fictitious deals was one where Rs 1.72 crore was transferred to Bengaluru-based Exalogic Solutions and marked as expenses towards software series and management consultancy
The I-T department found a service level agreement dated March 2017 between CMRL and Exalogic Solutions Private Limited. As per this, Exalogic was hired to provide services in the development, maintenance and management of software for the daily business and operations of CMRL’s corporate office and factory in Aluva.
A monthly remuneration of Rs 3 lakh was agreed upon for the service. Apart from this, Veena was also appointed as IT and Marketing Consultant of CMRL from January 2017, where it was agreed to pay her a sum of Rs 5 lakh per month. A total of Rs 1.72 crore was paid to Exalogic and Veena during 2016-17 to 2018-19.
The Income Tax probe found no evidence that Exalogic or Veena actually provided IT services to CMRL during that period. CMRL said it used common software such as Outlook, MS Office and Tally, along with Power Builder, an in-house accounting and inventory system maintained by its own IT staff. The SFIO also noted that ATNA Technologies, which was hired later, delivered organised IT solutions at a much lower cost.
CMRL Managing Director Kartha and CFO KS Suresh Kumar initially told the Income Tax Department that Exalogic had not provided IT services to the company. They withdrew their statements later.
After the Income Tax raids, the Union Ministry of Corporate Affairs directed the Serious Fraud Investigation Office to investigate the alleged misappropriation of funds of CMRL. The SFIO probe found that a substantial amount was diverted to companies owned by family members of Kartha. It also recommended disgorgement – repayment of unlawful gains – of Rs 2.7 crore from Veena.
According to the SFIO, Exalogic Solutions Private Limited was founded in 2014-15 with a paid-up capital of Rs 1 lakh. The investigating agencies mentioned it as a one-person company. The company’s financial standing was very weak by 2021-22, when it showed a negative net worth of Rs - 66 lakh and a minimum turnover of Rs 5 lakh. The primary software of Exalogic was ‘Inmeg’, a school and college management solution. Despite this, the main source of the company came from its contracts with CMRL during 2017-18 and 2018-19, the probe found. “Financial records reveal that CMRL was Exalogic’s largest client, while Veena T relied almost solely on income from CMRL,” the SFIO report said.
Records show that financial transactions between Exalogic and entities linked to Sasidharan Kartha predated the firm's contract with CMRL. In August 2015, Empower India Capital Investments Private Limited (EICPL), a non-banking financial company incorporated by Kartha and his wife Jaya, extended a loan of Rs 25 lakh to Exalogic. Under the agreement, repayment was scheduled to commence in August 2016 and be completed over 24 monthly instalments at an interest rate of 12%. In August 2016, EICPL sanctioned a second loan of Rs 25 lakh to Exalogic. Company records indicate that Exalogic repaid Rs 4 lakh in November 2016.
In a statement given to SFIO in October 2024, Veena said she provided advisory and consulting services to the CMRL management with regard to maintenance of their systems, servers and HR software.
The design and development of customised software to streamline the end-to-end operations of CMRL did not materialise. “The whole period from 2017 to 2019 was spent working on the design of the ERP. Finally, it was decided by both parties that readily available software in the market can be used,” her statement said.
She told investigators that records relating to services provided to CMRL were unavailable, as the company had ceased operations long ago.
The CMRL case sparked significant political debate in Kerala. While neither Veena nor Pinarayi Vijayan publicly responded in detail to the allegations, CPI(M) leaders argued that the controversy had disproportionately focused on the Rs 2.7 crore paid to Veena's firm, despite the case involving allegations of fictitious transactions worth Rs 135 crore.
In a Facebook post, CPI(M) leader TM Thomas Isaac contended that allegations of money laundering or illegal payments were unfounded, as the transactions were made through bank transfers and that income tax, GST and IGST had been paid on the amount. He also alleged that the Income Tax Interim Settlement Board reached its decision without hearing Veena or representatives of her company.
The report of the Income Tax Interim Settlement Board had pointed to illegal payments to politicians of various political parties in the state.
According to the report, searches conducted at the residence of CMRL CFO KS Suresh Kumar led to the recovery of loose sheets that allegedly recorded payments to politicians, temples, government officials and media organisations. During questioning, Suresh Kumar was asked about the abbreviations ‘PV’, ‘OC’, ‘KK’, ‘IK’ and ‘RC’ appearing in the documents. He reportedly identified them as references to senior UDF and LDF politicians Pinarayi Vijayan, Oommen Chandy, Kunhalikutty, Ibrahim Kunju and Ramesh Chennithala, respectively.
Further, the report stated that he told investigators the payments were made on the instructions of Sasidharan Kartha and were intended to facilitate the company's operations amid challenges linked to the smooth functioning of their business, since they had to obtain ilmenite mined by PSUs as their raw material. They had allegedly received threats that the business would be disrupted due to environmental concerns.
Income Tax documents also noted that initial statements made by some employees and the MD admitting the existence of payments to political entities were subsequently retracted. Kartha later said the names in the documents found referred to regular vendors and not political leaders.
Isaac said that loose sheets had no evidentiary value under the Evidence Act. “The public has not seen these sheets, and they are not part of the company's official accounts,” he said. He also alleged that the media and investigating agencies were engaging in “pick and choose” politics by focusing on Pinarayi Vijayan while ignoring other names that appeared in the sheets. According to Isaac, this issue had also been raised before the court.