No Escape to KSIDC from SFIO Probe for being a Govt Agency, Centre tells Kerala HC

KSIDC Under Scrutiny: SFIO Probe Continues Despite Claims of Govt Affiliation, Centre to Kerala HC
Kerala High Court - Government agency - KSIDC - SFIO - TAXSCAN

Scrutiny by the Serious Fraud Investigation Office ( SFIO ) on Kerala State Industrial Development Corporation Ltd ( KSIDC ) is expected to continue as the center submitted before the Kerala High Court that it cannot evade scrutiny by citing its status as a government agency.

The Kerala State Industrial Development Corporation Ltd ( KSIDC ) finds itself embroiled in a serious investigation by the Serious Fraud Investigation Office ( SFIO ), despite attempting to evade scrutiny by citing its status as a government agency.

The Central Government, along with the Director General of Corporate Affairs, Registrar of Companies, and SFIO, has firmly opposed KSIDC’s bid to avoid investigation, asserting that such actions would harm its reputation in the eyes of the public.

The development comes in the wake of ongoing investigations into alleged irregularities involving CMRL (Chennai Metro Rail Limited), Exalogic Solutions, and KSIDC. Exalogic Solutions, an IT company linked to Chief Minister Pinarayi Vijayan’s daughter, is reportedly implicated in a bribery case concerning CMRL.

In response to earlier directives from the court to demonstrate its integrity and remove itself from the SFIO’s scrutiny, KSIDC faces mounting pressure.

Justice Devan Ramachandran expressed concern over KSIDC’s reluctance to cooperate fully with the investigation, emphasizing the importance of maintaining credibility. The court highlighted the need for KSIDC to clear any allegations of financial impropriety, given its status as a responsible public sector entity.

The Additional Solicitor General of India, Arwind Kamath, argued that the SFIO possesses the authority to investigate transactions between CMRL and KSIDC, especially considering KSIDC’s representation on CMRL’s board. The investigation, he contended, would shed light on any potential wrongdoing by CMRL without KSIDC’s knowledge.

Respondents further emphasized KSIDC’s lack of vigilance regarding suspicious transactions with CMRL, despite its significant stake in the company. They criticized KSIDC’s belated decision to order a forensic audit in 2023, suggesting it was merely a reactionary measure. Additionally, concerns were raised about KSIDC’s role as an investment promotion arm and alleged misuse of public funds.

Senior Advocate Vaidyanathan, representing KSIDC, argued the corporation’s position, with further proceedings scheduled for April 5, 2024.

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