Surprise raids by the Vigilance and Anti-Corruption Bureau (VACB) on Kerala State Financial Enterprises (KSFE) offices in the state have embarrassed the ruling Left Front in Kerala and the development has also put the front in a difficult situation.

The VACB raided 40 branches of the KSFE on Saturday and found serious irregularities in 35 of them. While four branches were found to have committed fraud in sanctioning gold loans, 10 kept the pledged gold ornaments without proper security.

The VACB has found that many branches started new chitties with less number of customers than prescribed. The agency are suspicious over the high demand for chitties of big monthly installments ~`2 lakh to `5 lakh. The agency suspects that some customers might be utilising big installment chitties for money laundering, a few chitties were suspected to be in the name of benamis.

State finance minister Thomas Issac is displeased over the raids. It may be noted that these raids were carried out at a time when the Central agencies, particularly the Enforcement Directorate, were probing many of the state government’s schemes for money laundering deals. Realising this, finance minister Isaac opted for a public response and termed those who had conducted the raid as “mentally unsound”.

Unusual developments are taking place in the Kerala CPI-M ever since the Left Front government brought the controversial ordinance, adding Section 118A to the Kerala Police Act. Issac, also a member of the CPI-M central secretariat, criticised the VACB, which is headed by chief minister Pinarayi Vijayan.

Senior party leader Anathalavattom Anandan said the raids were part of a conspiracy hatched between some VACB officers and private financiers. He raised doubts over the VACB officers’ claim that their raid followed complaints from the public and told the media that the agency should reveal the names.

Meanwhile, Opposition leader Ramesh Chennithala asked Isaac whether it was CM Vijayan, the ‘insane person’ behind the raids. “The finance minister is coming out against agencies which unearth corruption and other irregularities in his department. There’s serious corruption in the KSFE. The CM should state whether the agency dropped the raids midway following the finance minister’s criticism,” Chennithala said. Union minister of state for external affairs V Muraleedharan said Kerala Cabinet has lost its collective responsibility.