Kodungallur violence

The Marxists’ Own Bofors

The CBI is likely to chargesheet the CPM’s Kerala state secretary Pinarayi Vijayan for helping a Canadian firm swindle public money worth almost Rs 400 crore

KA SHAJI
Thiruvananthapuram

PINARAYI VIJAYAN, the CPM’s state secretary in Kerala, has just returned to the Politburo after four months of suspension. But celebration time may already be over.

The CBI probe into kickbacks received from Canadian firm SNC Lavalin, which was setting up a cancer hospital in Pinarayi’s hometown Thalassery, is in its final phase, and Pinarayi could be interrogated any time.

The other man who returned to the Politburo along with Pinarayi — Chief Minister VS Achuthanandan — is relishing the chance to corner his rival. The state government has put it on record with the CBI that SNC Lavalin has swindled up to Rs 12.54 crore, collected from different overseas agencies. This amount is in addition to public money worth Rs 374.50 crore wasted by Lavalin in the name of carrying out repairs on a few hydel projects in Kerala. According to CBI sources, Pinarayi, as power minister from 1996 to 1998, had flouted norms in awarding contracts to Lavalin. Senior CBI officials told TEHELKA that the evidence against Pinarayi is damning and he is likely to be chargesheeted soon.

It was only a few weeks ago that then Home Secretary KK Vijayakumar informed the CBI team that Lavalin had cheated the state government of Rs 12.54 crore of the Rs 25.3crore collected for the cancer hospital.

Pinarayi hired senior Supreme Court lawyers when he appeared before the Kerala High Court and declared there was nothing irregular about the deal and the government had suffered no loss. But the court decided in favour of a CBI inquiry.

Controversy surrounded the Lavalin deal ever since it was signed in October 1996 by the EK Nayanar-led Left Front government in which Pinarayi was the power minister. Lavalin entered Kerala in 1995 by signing an MOU with the Kerala State Electricity Board, which appointed the firm as a consultant for modernising and replacing generators in three hydroelectric projects in Idukki district.

In February 1996, the contract was extended to include project supervision, technical assistance and sourcing of funds. The project was specified for completion within three years. The consultancy fee was set at Rs 20.31 crore.

The rot set in around October 1996 when the CPM returned to power. A highpowered official team led by Pinarayi visited Montreal to revise the Lavalin contract. The consultancy contract was expanded to include a supply contract for procuring equipment. The consultancy fee remained unaltered but an additional Rs 149.15 crore was committed for buying equipment. It may be mentioned that Lavalin itself did not manufacture any power equipment. The contract was tied to other deals. An accompanying grant for the Malabar Cancer Centre Hospital was negotiated. Lavalin commi tted itself to mobilising Rs 98.3 crore for the hospital.

S. Varadachari, then Principal Secretary (Finance) of the Kerala government, questioned the deal and called it a ploy to bypass accepted tendering norms. The signing of the contract was rushed through in 1997, ignoring the lower offer for the same job by the public sector Bharat Heavy Electricals Limited (BHEL).

Lavalin pledged to complete the cancer hospital within four years. By March 1998, Kerala’s electricity board as well as the Cabinet had formally approved the deal, including the grant to the hospital. The recommendations of an experts’ committee in favour of BHEL were ignored. After the renovation was done, not a single unit of additional power was generated. The imported equipment and technology was found unfit for the hydel projects.

By July 2005, the Congress was back in power. The Comptroller and Auditor-General (CAG) pointed out a serious breach of norms and undue haste in signing the deal. The CAG report stated that the deal caused a loss of Rs. 374.50 crore to the exchequer. In January 2006, the state Vigilance and Anti-Corruption Bureau ruled that the deal was out of order because no tenders had been invited. In February, the Vigilance Department recommended chargesheeting top officials.

IN MARCH 2006, a writ was filed in the High Court demanding a CBI inquiry. The Congress government in power decided to institute the inquiry. This was followed by the usual cover-ups. The Vigilance Department claimed a crucial file related to Pinarayi was missing. The SP who investigated the case went on long leave. Nevertheless, Vigilance Director Upendra Verma submitted an FIR without consulting the government. It was the last phase of the Congress-led government’s tenure. The Left was expected to return to power. The Congress tried to transfer Verma. The Election Commission blocked the move because the model code of conduct was in force.

In July 2006, the CBI found a prima facie case of corruption and asked the state Vigilance Department to hand over concerned files. Recently, the CBI unearthed some crucial documents linking Pinarayi to the deal from the cancer centre, electricity board headquarters and state Secretariat. Home Minister Kodiyeri Balakrishnan, a Pinarayi loyalist, was an unofficial member of the electricity board when the deal was finalised. He is also on the board of the cancer hospital from which the grant money vanished. The cancer centre received less than Rs 9 crore.

Of the Rs 98.3 crore pledged to the hospital, Rs 12 crore was paid to Technikalia, a company in Chennai. Why was this company authorised to receive the grant? An account had been opened in the SBI’s Thalasserry branch, where the hospital is located, to credit the grant. According to party sources, Achuthanandan had given a memorandum supported by documents to the party’s central leadership regarding the involvement of his Politburo colleague in the deal.

But the party took no action. Senior CPM leaders Prakash Karat and Sitaram Yechuri routinely evade questions on the deal at press meets. They may be forced to respond very soon.