The Enforcement Directorate (ED) has uncovered major violations involving foreign funds worth Rs 220 crore received by the Kuniya College of Arts and Science in Kasaragod, Kerala. The college, owned by the Kunhahmed Musliyar Memorial Trust, is now under scrutiny for potential breaches of the Foreign Exchange Management Act (FEMA) and the Foreign Contribution Regulation Act (FCRA). National agencies, including the National Investigation Agency (NIA), are expected to join the probe following preliminary findings by the ED.
Officials from the ED’s Kochi zonal office conducted searches on July 31 at two premises linked to the trust. The trust, founded in 2023 and affiliated to Kannur University, had allegedly received over Rs 220 crore since 2021 from its UAE-based chairman, Ibrahim Ahmad Ali, an industrialist with roots in Kuniya village and reported connections to the Jamaat network in Sharjah. Most of the trust’s members also reside in Sharjah.
The ED found that the trust had no FCRA registration or permission from the Union Home Ministry, mandatory prerequisites for receiving foreign contributions for educational or charitable purposes. Moreover, the trust did not maintain a designated FCRA bank account as required by law. Despite this, massive funds were recorded in the trust’s books as “unsecured loans” from Ali, routed through his UAE-registered company, Universal Lubricants LLC.
According to investigators, no loan agreements, interest rate terms, or repayment schedules were presented to justify the classification of the funds as loans. No repayments have been made to date. The ED also discovered a cash transaction of Rs 2.49 crore received directly from Ali, further violating FEMA provisions.
Under Section 2(1)(h) of the FCRA, any currency received from a foreign source, including NRIs, is classified as a foreign contribution. Section 11 of the Act stipulates that any entity engaged in education, culture, social or economic activities must either register under the FCRA or obtain prior permission from the government to receive such funds. The Kunhahmed Musliyar Memorial Trust had done neither, rendering the entire Rs 220 crore inflow, on the face of it, illegal, said the ED.
The trust has maintained that it did not seek public donations and that the funds were personal contributions from its chairman to establish a world-class educational institution in his hometown. A director of the trust stated that a formal response to the ED is being prepared and insisted that no laws were violated.
However, ED officials argue that even if the money was intended as a philanthropic donation or endowment, it should have followed the legal route under FCRA, including proper documentation and transparent reporting. If the funds were treated as loans, the transactions would require formal agreements and RBI clearance for cross-border lending under FEMA guidelines.
The ED has seized key financial documents, including ledger accounts, a cash book, and a hard drive with financial records, during its inspection. Investigators also noted that part of the foreign funds was allegedly used to purchase agricultural land in India, a transaction that violates FEMA regulations.
Kuniya College of Arts and Science, inaugurated in 2023, is located on a sprawling 100-acre campus in Kuniya near Periya. The institution showcases striking Islamic-inspired architecture with domes, arched corridors, and symmetrical colonnades. Inside, it features air-conditioned classrooms and designer furnishings, highlighting the ambition to establish it as a premier educational hub.
Despite its high-end facilities and academic offerings, the funding trail has now cast a shadow over the institution’s legitimacy. The ED contends that the magnitude and manner of fund transfer raise serious legal questions. With possible links to foreign religious networks and the absence of financial transparency, the case has triggered wider security concerns. Central intelligence and enforcement agencies are reportedly assessing whether the matter warrants a deeper probe into potential subversive or unlawful financial flows.
The ED has confirmed that the investigation is ongoing and further action will depend on analysis of the seized documents and the trust’s formal response.
