Kerala Finance Minister T M Thomas Isaac on Wednesday accused the BJP-NDA government at the Centre of trying to destroy the Kerala Infrastructure Investment Fund Board (KIIFB) and thus scuttle the state's development using the Enforcement Directorate (ED) as assembly elections were round the corner.
Targeting Union Finance Minister Nirmala Sitharaman, who recently criticised the KIIFB, he alleged the union minister was "misusing" her subordinates for political motives.
Isaac's attack against the Centre and Sitharaman came a day after the ED summoned two top officials of the KIIFB to appear before it in connection with a probe into its external borrowings through 'Masala Bonds'.
Stating that summoning KIIFB officials at the time of polls was a violation of the code of conduct, he said through the move, a large political conspiracy against the Board, led by people including union finance minister, has emerged.
"The ED's move is a violation of rules during the time of polls. Union Finance Minister herself is leading the blatant violation of the code of conduct," Isaac alleged at a press meet here.
Any attempt to derail the state's development would be resisted with the support of people, he said.
Sitharaman, at a recent election rally in Ernakulam, had questioned the role of the KIIFB in Kerala budget making.
Dismissing charges that KIIFB's Masala Bond was a violation of the country's Foreign Exchange Management Act (FEMA), Isaac said there were clear guidelines for borrowing under the Act and any 'body corporate' can take a loan from abroad with the permission of the Reserve Bank.
As per the guidelines, KIIFB had applied to the RBI, through banks, and received the mandatory permission.
"That's how the loans were taken," he explained, adding that the report on what the money was taken for was also submitted to the apex bank.
The ED was cooking up false stories without even a preliminary understanding of how KIIFB was raising its funds, Isaac said.
Confirming that the agency had summoned KIIFB officials two times before also, he alleged that the ED investigators had threatened the state officials.
A BJP leader's son was entrusted with the investigation against the KIIFB and he had track-record of carrying out raids in the houses of non-BJP leaders in various states on behalf of the saffron party, Isaac alleged.
CPI(M) state acting secretary VIjayaraghavan also flayed the Centre and said no central agencies would be allowed to scuttle Kerala's development.
He told reporters here that the ED probe was a political move by the BJP targeting assembly election.
However, BJP state president K Surendran welcomed the ED probe against KIIFB and alleged that Chief Minister Pinarayi Vijayan had ruled the state for the last five years under the cover of a fraudulent group.
"Vijayan should answer to the people over the KIIFB scam," he said in Kottayam.
The ED officials on Tuesday confirmed that notices had been issued to the KIIFB Chief Executive Officer (CEO) and deputy CEO directing them to join the probe next week.
The ED is probing whether the KIIFB violated provisions of the Foreign Exchange Management Act (FEMA) in its external borrowings through 'Masala Bonds'.
The agency also took note of a CAG report on Kerala finances, tabled in the state assembly in January this year, in launching its investigation against top officials of KIIFB.
In its report, the CAG had criticised the KIIFB's external borrowings through 'Masala Bonds', saying these were not in accordance with the Constitutional provisions and lacked legislative approval.
Masala bonds are specialised debt instruments issued outside India but denominated in Indian Rupees, rather than the local currency.