KIIFB misusing public funds for short-term political purposes: Chennithala

Senior Congress leader Ramesh Chennithala on Tuesday dismissed claims made by the Chief Executive Officer of the Kerala Infrastructure Investment Fund Board (KIIFB) regarding alleged government spending and financial irregularities linked to election campaigning. Describing the CEO’s statement as a calculated attempt to divert attention from core issues and misrepresent facts before the public, he said the assertion that advertising expenditure significantly influences KIIFB’s financial ratings is misleading and contrary to established financial principles.

Mr. Chennithala explained that if advertising spending were truly a determining factor for credit ratings, institutions that invest heavily in advertisements would automatically secure the highest ratings. While acknowledging that KIIFB bonds have received favorable ratings, he clarified that such ratings cannot be attributed merely to brand visibility within Kerala. Ratings such as Double-A or Triple-A are based on well-defined parameters, including cash flow stability, institutional financial strength, repayment capacity, government backing, and other standard criteria used by rating agencies.

He further argued that KIIFB’s advertising campaigns — largely conducted in Malayalam and targeted at the Malayali population — bear no logical connection to bond ratings. Alleging that KIIFB is misusing substantial public funds without proper legal authority for short-term political purposes benefiting the government, he pointed out that advertising expenditure reportedly increases 10 to 12 times during election years compared to non-election years, reflecting political mobilisation rather than financial necessity.

More than ₹100 crore

Referring to the KIIFB Act of 1999 and its 2017 amendment, Mr. Chennithala noted that there is no provision authorising the board to spend more than ₹100 crore on multimedia advertising campaigns. Under the Act, KIIFB is permitted to arrange loans from other government sources with an additional 1% interest margin. Utilising this provision, KIIFB has mobilised funds by issuing bonds to financial institutions at average interest rates of up to 9.5% for infrastructure development.

He cited records showing that funds borrowed at 7.75% interest by State institutions, including the Kerala State Electricity Board, were reportedly taken over by KIIFB at higher rates and subsequently extended to other State entities at around 9%. He also noted that masala bonds issued by KIIFB carried an interest rate of approximately 9.8%. Nearly 40% of the total funds raised were reportedly repaid ahead of schedule after assessing potential legal risks, a fact he said was well known to the KIIFB CEO.

Addressing concerns over the transfer of crores of rupees to individuals’ bank accounts, Mr. Chennithala said that although the CEO claimed the recipients were approved Public Works contractors, the payments were made under the advertising head of accounts. If the funds were legitimately routed through Public Works contractors, KIIFB should have clarified this. Instead, he alleged, payments were directly transferred to contractors upon completion of work, contradicting the CEO’s assertion that there was no direct connection with contractors.

If voted to power

Terming the financial losses, corruption, and irregularities associated with KIIFB as far-reaching, Mr. Chennithala stated that if the United Democratic Front (UDF) comes to power, a committee of financial experts, chartered accountants, and Vigilance specialists would be constituted to conduct a comprehensive review of all financial operations and project implementations undertaken so far. Detailed forensic audits would be carried out, and appropriate legal action — including criminal proceedings — would be initiated against the CEO and other officials if any irregularities are established. He added that if KIIFB is functioning as a covert political funding mechanism, it is entirely unacceptable.