KMM Trust received foreign contribution to the tune of ₹220 crore, says ED

A search conducted by the Directorate of Enforcement (ED), Kochi Zonal Office, revealed that Kunhahmed Musliyar Memorial (KMM) Trust, a charitable organisation, and its chairperson Ibrahim Ahmad Ali, an NRI, had reportedly received a foreign contribution to the tune of ₹220 crore during the period 2021 till date from the latter, which was reflected in the books of accounts as unsecured loans.

The search operations were conducted on July 31 under the provisions of the Foreign Exchange Management Act (FEMA), 1999 at two locations in Kasaragod in connection with suspected violations of the Act and receipt of foreign contributions by the trust and its chairperson. Though it was reflected in the books of accounts as unsecured loans, no loan agreement, interest rate terms, or repayment schedule was available, and no repayment had been made till date.

Mr. Ali received the funds from Universal Lubricants LLC, a company incorporated in UAE. In the absence of supporting documentation and in view of clarification given under Section 2(1)(h) of the Foreign Contribution Regulation Act (FCRA), 2010, the said “loan” prima facie qualifies as foreign contribution under FCRA.

Not registered

The trust is not registered under the FCRA and does not possess the mandatory permission or a designated FCRA bank account to receive foreign contributions. Further, a part of these foreign contributions were found to have been utilised for the purchase of agricultural land in India, in violation of existing regulations.

It was also revealed during the search that the trust had received ₹2.49 crore in cash from the NRI, violating provisions of FEMA, 1999. During the search, incriminating documents, ledger accounts showing unsecured loans of ₹220 crore, the cash book of the trust, and a hard disk containing financial data were seized. The investigation conducted so far indicates contravention of the provisions of FEMA, 1999. Further investigation is under progress, said the ED in a statement.