New Delhi:
Kerala Chief Minister VD Satheesan on Thursday described the Kerala Infrastructure Investment Fund Board (KIIFB) as an "empire of its own", as he released an expert committee report exposing serious financial and administrative irregularities in the agency under the previous Pinarayi Vijayan-led LDF government.
The 106-page report reveals that KIIFB expanded its workforce from just 40 sanctioned posts to 498 employees without the required government approval, spent Rs 203.72 crore on publicity in a single financial year and effectively approved its own borrowing guarantees, bypassing crucial government checks.
"KIIFB sought approval and KIIFB approved it, breaking all ordained rules" Satheeshan said.
The findings raise serious questions about how an infrastructure financing agency created to accelerate Kerala's development came to function with limited financial oversight.
How KIIFB Came To Approve Its Own Borrowings
One of the most significant findings concerns a meeting held on June 6, 2023, chaired by then Chief Minister Vijayan.
The Finance Department had refused to provide further guarantees for KIIFB loans for the next three years, pointing out that the Centre was deducting KIIFB's borrowings from Kerala's own borrowing limits.
Under Kerala's Rules of Business, such a refusal could be overturned only by the Council of Ministers.
However, the committee found that the decision was reversed at a meeting attended by just four people: the Chief Minister, the Finance Minister, the Additional Chief Secretary for Finance and then KIIFB CEO KM Abraham.
The government order formalising the decision was issued nearly two years later, on March 24, 2025, by the Finance (Infrastructure) wing headed by Abraham.
The committee found that Abraham's position did not have the authority to issue government orders under the Rules of Business until June 13, 2025.
One Official, Multiple Powerful Positions
KM Abraham, a former Kerala Chief Secretary, served as KIIFB CEO from January 2018. From 2021, he also held the position of Chief Principal Secretary to Chief Minister Pinarayi Vijayan.
He simultaneously functioned as the ex-officio Secretary of the Finance Department's infrastructure wing.
The committee found that this arrangement undermined the independent approval process meant to regulate KIIFB's borrowing.
Only the first three government guarantees, covering Rs 18,247 crore, were cleared through the regular Finance Department.
Subsequent guarantees were approved through the Finance (Infrastructure) wing headed by Abraham, with decisions taken at the level of a Deputy Secretary.
According to the report, these subsequent approvals did not go through the Finance Secretary, Finance Minister or Cabinet.
The regular Finance Department also lacked access to files maintained by the infrastructure wing.
The committee concluded that KIIFB had effectively reached a position where the authority seeking approval and the authority granting it were practically the same.
From 40 Sanctioned Posts To 498 Employees
The committee also flagged a massive expansion of KIIFB's workforce without the required government sanction.
In 2017, the state government approved just 40 posts for the agency.
However, its workforce subsequently increased to 498 people, most of whom were recruited through an external agency.
The additional positions were created by KIIFB's board, executive committee and CEO without obtaining the statutory government approval, the report said.
The committee also found that KIIFB revised employee salaries in 2023 without consulting the government.
Rs 203.72 Crore Publicity Spending Under Scanner
The report has also raised questions over Rs 203.72 crore spent on publicity during 2025-26, the financial year immediately preceding the Kerala Assembly election.
The expenditure included the previous government's "Ente Keralam" and "CM with Me" programmes. These campaigns tried to highlight the left government achievements. "The money was spent from the amount borrowed at night interest," stated the chief minister.
However, what was shocking was KIIFB's accounts recorded only Rs 21.16 crore under advertising expenditure.
Statutory auditors found that Rs 96 crore spent on Ente Keralam and Rs 6.14 crore spent on CM with Me had instead been booked as infrastructure project expenditure!
The auditors also flagged vendors selected outside prescribed procedures and bills that lacked supporting invoices.
KIIFB's own audit committee has ordered a detailed audit of the Rs 203.72 crore publicity expenditure.
The findings raise questions about the use of infrastructure funds for government publicity programmes ahead of the election.
Opposition Had Warned Of A 'Super Cabinet' In 2016
The committee's findings have revived warnings raised by Opposition legislators when the LDF government amended the KIIFB Act in 2016.
Opposition members had argued that the proposed structure, with the Chief Minister heading the board and the Finance Minister playing a central role, could create a parallel decision-making authority.
Some described it as a "Super Cabinet" and questioned whether the agency would undermine the powers of government departments and the Legislature.
A decade later, the expert committee has concluded that several safeguards intended to ensure financial accountability were not followed in substance.
The panel said the presence of senior government officials on KIIFB's board could not replace the formal approvals required under the Rules of Business.
Committee Recommends CAG Audit
The committee, headed by former Planning Commission Member Secretary Sudha Pillai and including former Union Revenue Secretary Tarun Bajaj, has recommended a comprehensive performance audit by the Comptroller and Auditor General covering KIIFB's operations from 2016-17 to 2025-26.
It has also recommended merging the Finance (Infrastructure) wing back into the regular Finance Department, returning officers on deputation to their parent departments and removing the KIIFB CEO's statutory power to make appointments.
The panel has proposed reviewing employee salaries and allowing contractual staff to continue only until their existing contracts expire.
KM Abraham stepped down as KIIFB CEO on May 5, 2026, following the LDF's electoral defeat.
While the committee has not assigned individual responsibility, its findings point to a serious breakdown of financial oversight and administrative accountability.
KM Abraham, former Finance Minister Thomas Isaac and the CPI(M) are yet to respond to the report.