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Kochi ∙ The Enforcement Directorate (ED) has summoned former finance minister Thomas Isaac for alleged violations of law in issuing masala bonds. It is recommended to appear on the 12th of this month. The lawsuit is related to the Kifbi Masala bond case. The court had previously stopped sending the notice. However, the Supreme Court later clarified that there is no bar to continue the investigation and a fresh notice can be sent to the ED. The announcement was banned for the first time following Thomas Isaac’s petition asking for personal information.
∙ The controversy is like this
In 2019, Kifbi raised 2150 Crore by issuing Masala bonds on the London Stock Exchange. The interest rate is 9.72%. A masala bond is issued abroad in Indian rupees. The advantage is that the amount raised is in rupees and is not affected by exchange rate differences. The opposition initially criticized the fact that interest rates were high and would plunge the state into a debt trap. The government defended itself by saying that the interest rate was low compared to masala bonds offered by other companies.
Former Opposition leader Ramesh Chennithala also came forward and accused him of being a secret behind the purchase of CDPQ Masala Bond, which holds a stake in Lavlin Company. The government and Kifbi have denied the claim, saying CDPQ, a Canadian pension fund, may have invested in many places.
Controversy erupted when the CAG report declared the masala bond unconstitutional. The government defended the CAG’s position that the state had no authority to take foreign loans, saying that KIFB was a legal entity. Criticisms against Kifbi were brought to the meeting and rejected. The government had also argued in the Supreme Court that the ED is now putting forward CAG arguments that were rejected by the legislature.
English summary:
KIIFB Masala Bond: Law Enforcement Summons Thomas Isaac
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