Probe Agency ED Raids Kerala Trust Over Rs 220 Crore Foreign Funds

The Directorate of Enforcement (ED), Kochi Zonal Office, conducted search operations on July 31, at two locations in Kasaragod, Kerala, under the provisions of the Foreign Exchange Management Act (FEMA), 1999.

The searches were carried out in connection with suspected violations involving foreign contributions received by Kunhahmed Musliyar Memorial Trust and its Chairman, Ibrahim Ahmad Ali, a Non-Resident Indian (NRI).

Preliminary investigations by ED revealed that the Trust had received over Rs 220 crore since 2021 from Ibrahim Ahmad Ali, recorded in its accounts as "unsecured loans." However, there were no loan agreements, interest terms, or repayment schedules in place, and no repayments have been made so far. The funds originated from M/s Universal Lubricants LLC, a UAE-based company.

In the absence of proper documentation, and in light of clarifications under Section 2(1)(h) of the Foreign Contribution Regulation Act (FCRA), 2010, the transaction appears to qualify as foreign contribution. The Trust, however, is not registered under FCRA and lacks the required permission and designated FCRA bank account to lawfully receive such funds.

ED further found that part of the foreign contribution was used to purchase agricultural land-another violation of regulatory provisions. Additionally, the Trust was found to have received Rs 2.49 crore in cash from Ibrahim Ahmad Ali, contravening FEMA norms.

During the searches, ED seized incriminating documents, ledger records showing unsecured loans, the Trust's cash book, and a hard disk containing financial data.

The case indicates significant contraventions of FEMA, 1999, and further investigation is ongoing.