Kerala High Court | Photo: Mathrubhumi Archives
Kochi: The Kerala Infrastructure Investment Fund Board (KIIFB) told the Kerala High Court on Friday that the ongoing probe by the Enforcement Directorate (ED) has had an adverse impact on the board's ability to raise funds, which in turn has affected different infrastructure projects.
KIIFB was established as the principal funding arm of the Kerala government in 1999. Its objective is to channelise funds for critical and large public infrastructure projects in the state.
On Friday, Arvind Datar, the counsel representing KIIFB, informed the court that foreign financial institutions have been and will continue to decline funds to KIIFB citing the ongoing probe by the central agency.
"When I go to a foreign company or a foreign financial institution to raise funds, they do due diligence and the first question they ask is if there are any proceedings pending against KIIFB. There is no point arguing that I have a very good case on merit. They are going to say 'your own government's ED is investigating you so we can't invest'.
"Two-three banks have already said this, and I am willing to place those on record. This has ramifications for the entire state of Kerala. No other institution is facing this problem. A larger public interest is involved in this matter," Datar said on behalf of KIIFB.
Datar went on to contend that even though the RBI regulated masala bonds, which are allegedly at the centre of the ED probe, they are used by many public sector undertakings. So it seems that KIIFB has been singled out.
"Not only KIIFB, but many public sector undertakings, including the National Highways and Infrastructure Development Corporation and Power Trading Corporation, have floated masala bonds. But none of them has come under the ED scanner. There is no reason to single out KIIFB. This has large-scale ramifications on the infrastructure of Kerala," Datar added.
He urged the court to set a timeline for the ED to complete its probe and direct the probe agency to submit details of all the masala bonds issued and all the investigations into the same.
After Jaishankar V. Nair, the counsel representing the ED, sought more time to file a counter-affidavit, the court adjourned the matter for next hearing on September 23.