Kerala CM's daughter Veena diverted funds from CMRL to EICIPL to repay loan: SFIO
T. Veena, the Kerala Chief Minister's daughter, diverted the funds she received from Cochin Minerals and Rutile Limited (CMRL) to settle the debt of her firm Exalogic Solutions Private Limited with Empower India Capital Investments Private Limited (EICIPL), a company run by Sasidharan Kartha, the Managing Director of CMRL, and caused a financial loss to CMRL, a publicly held company, according to the Serious Fraud Investigation Office (SFIO).
The SFIO's final complaint filed before a Special Court in Kochi early this month noted that the diversion of funds 'effectively transferred a ₹50 lakh liability from the private company EICIPL to the publicly held CMRL, causing financial loss to CMRL.'
The report pointed out that EICIPL had extended Exalogic a bank loan of ₹25 lakh on August 5, 2015. The payment was transferred to the account of Exalogic on August 6, 2015. The repayment was scheduled to begin on August 1, 2016 in 24 instalments with an interest rate of 12%.
'However, the Exalogic did not make any repayment as on 28/8/2016. Despite this, EICIPL sanctioned another loan of ₹25 lakh to Exalogic, which was disbursed on 29/8/2016. It was after the second loan that Exalogic repaid ₹4 lakh to EICIPL on 13/11/2016,' the SFIO reported.
The agency had reported that CMRL had made a monthly payment of ₹5 lakh to Ms. Veena and ₹3 lakh to her firm, Exalogic, as retainer for IT and marketing consultancy services. 'The bank records indicated that funds paid by CMRL to Exalogic were redirected to cover Exalogic's debt with EICIPL,' according to the complaint.
The 'investigations uncovered the collusion between T. Veena and Sasidharan Kartha to misappropriate funds.' The emails between the companies 'predominantly focused on invoice generation and payment processing rather than actual service provision, suggesting deliberate misuse of consultancy agreements for financial gains,' the SFIO alleged.
The 'financial manoeuvrings effectively transferred ₹50 lakh liability from EICIPL to CMRL without delivery of any consultancy services,' it charged.
Mr. Kartha is the first accused and Ms. Veena the 11th accused in the case booked under the Companies Act.
The SFIO has named both Ms. Veena and Mr. Kartha and the three firms, CMRL, Exalogic and EICIPL as the accused in the third charge in the case. The allegation is that they committed the offence of fraud, an offence under Section 447 of the Companies Act, which is defined as any 'act, omission, concealment, or abuse of position with the intent to deceive, gain undue advantage, or cause harm to the company or its stakeholders.'
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