Pinarayi Vijayan exempted from SNC Lavalin case

The case involved an alleged corruption of about Rs 374 crore for the maintenance and modernisation of Panniyar, Chengulam and Pallivasal hydroelectric projects in Kerala Allowing a petition filed by Pinarayi Vijayan, secretary of the state unit of the CPI (M) and former power minister, a CBI special court today exempted him from the list of offenders in the controversial SNC Lavalin corruption case. The special court also exempted six senior former government and Kerala State Electricity Board (KSEB) officials from the list. Rejecting the charge sheet filed by the CBI, the special court judge, R Raju, said the CBI had failed to establish a criminal conspiracy case against Vijayan and others in the case. The court found the allegations levelled against Vijayan and others in the charge sheet filed by the CBI as baseless. As per the order of the court, the case is likely to be closed as the others accused in the case, SNC Lavalin Company and its senior vice president Claus Trendel, have not yet been questioned by the CBI. The case involved an alleged corruption of about Rs 374 crore for the maintenance and modernisation of Panniyar, Chengulam and Pallivasal hydroelectric projects in Kerala. The agreement between the company and the Kerala government was cleared while Vijayan was the state's minister for power.

In his petition, Vijayan claimed it was nowhere mentioned in the charge sheet that he made financial gains from the scam and added it was registered only for political gain. However, the CBI accused Vijayan of according the status of a distributor to SNC Lavalin after he became the power minister in 1997. Prior to this, the company was only a consultant. The CBI alleged, before vetting the agreement, the minister had made a trip to Canada to clinch a deal with the company unaccompanied by technical experts, who could advice him. Further, the minister had made his decision without the approval from the KSEB or the Cabinet. He also chose to keep away important details of the deal from the state Cabinet and did not take interest to ensure the grant (Rs 90 crore),promised by SNC Lavalin to the Malabar Cancer Centre was realised on time. He also nominated his personal staff member, Sasidharan Nair, as special officer of the Cancer Centre to safeguard his interests, the CBI alleged. The CBI, however, did not allege Vijayan had made any personal gain through the deal. HISTORY OF SNC LAVALIN SCANDAL In 1992, the Central Electricity Authority (CEA) of India rejected a proposal of Kerala State Electricity Board (KSEB) to renovate the three hydro-electric power projects at Pallivasal, Sengulam and Panniar instead the CEA recommended a capacity upgradation of the generators in these three power projects, after they found that these projects are in good condition.[3] KSEB disregarded this recommendation and went forward with the decision to renovate these projects. Initial negotiations.

The initial negotiations with the Canadian company SNC-Lavalin - a company which had been present in the state's power sector for several decades - began during the tenure of United Democratic Front government,[7] under the leadership of the then power minister C.V. Padmarajan[9] and later, the Kerala State Electricity Board (KSEB) signed a memorandum of understanding (MoU) with SNC-Lavalin on 10 August 1995, when G. Karthikeyan of the Congress Party was the power minister, after the resignation of C.V. Padmarajan. Under the provisions of the MoU, the funds for the renovation were to be arranged by SNC Lavalin from the Export Development Canada (EDC), Canada, and the Canadian International Development Agency (CIDA). Later, it was also found out in a probe by CBI, that G. Karthikeyan also wanted a quid-pro-quo assistance from the Canadian government for the setting up a hospital for granting a project for refurbishment of Pallivasal, Shengulam and Panniyar Hydro electric stations in Kerala, after the revelation of a letter by G Karthikeyan to the then vice-president of Lavalin business operations, Klaus Triendl, who is also an accused in the Lavalin scandal.[4] It was only in September 1995, that the KSEB undertook a feasibility study on the proposal, by a retired Chief Engineer of the KSEB, who later became a consultant to SNC-Lavalin.[1] Consultant's report. Based on the consultant's report and further discussions, the KSEB under the leadership of G. Karthikeyan, signed the contracts

with SNC-Lavalin to provide technical services for management, engineering, procurement and construction supervision on 24 February 1996, to ensure completion of the projects within three years. The consultancy agreement did actually include the rates for various equipments to be purchased as part of the project. Consultancy agreements were converted into fixed price contracts for the supply of machinery and technical services as part of the renovation at a cost of 67.94 million Canadian dollars (Rs 169.03 crores). The final follow-up agreement with SNC-Lavalin regarding the renovation of PSP project was signed by Pinarayi Vijayan of Left Democratic Front - after they took office winning the majority in legislative assembly in 1996 - in February 1997.[9] Technically, the Left Democratic Front (Kerala) led government could not retreat from the agreements, even if they wanted to,[9] according to the provisions of the MoU which was already signed by their predecessors,

that is the ministers of United Democratic Front government. Contract signed. After the final contract was signed, the KSEB entrusted the National Hydroelectric Power Corporation Limited (NHEPCL) a study to justify the prices quoted by Lavalin, and they concluded in that study that in view of the grant to the proposed Malabar Cancer Centre (MCC), the purchase of Canadian equipment and accessories could be considered favorably.[3] CAG FINDINGS The CAG found that Lavalin was only a consultant intermediary and not the original equipment manufacturer and that the supply of goods and services was made by other firms at a much higher cost leading to excess expenditure. According to the CAG, the absence of due professional care in negotiating the foreign loan proved to be detrimental to the financial interests of the Board. The Board also could not ensure the quality of renovation work in the absence of technology transfer and training of its engineers. Owing to various technical defects in the equipment, the generation of power could not be maintained even at the pre-renovation level and the Board had to spend on repairs. According to the CAG, failure to exclude the fee for technical consultancy from fixed price contracts resulted in an avoidable payment of Rs 20.31 crores, and failure to negotiate and exclude the exposure fee from the loan agreement resulted in avoidable payment of Rs 9.48 crores and future liability of Rs 2.21 crores. In the opinion of the CAG, there was also an avoidable payment of Rs 1.20 crores as commitment fee despite there being committed but unavailed advance. The CAG found that the Government did not receive Rs 89.32 crores out of the grant of Rs 98.30 crores that was promised for the Malabar Cancer Centre as the MoU was not renewed in time during the tenure of United Democratic Front when Kadavoor Sivadasan was the minister in charge of powe