People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 47

November 24, 2013



Lavlin Verdict: Inevitable Ending

of a McCarthyian Conspiracy-II


K K Ragesh


THE designed plot and hullabaloo created by the anti-CPI(M) conspirators stood debunked after the court rejected the argument of the CBI that the Balanandan committee recommendation was overlooked and the same was suppressed before the cabinet so as to get the approval of the council of ministers fraudulently. The Balanadan committee was appointed by the LDF government on 19th September 1996 to make a detailed study and to formulate specific recommendations on various issues vis-à-vis the steps to be taken to raise the resources for enhancing power generation. It was not appointed to study about the Pallivasal, Sengulam and Panniyar (PSP) power projects because the contract for renovation and modernisation of PSP had already been executed on 24th February 1996 during the period of the UDF government. Furthermore, the Balanadan committee while estimating a cost of Rs 100.50 crore had calculated the same only for replacement of certain equipment as a short term and crisis management measure.  But the KSEB decided to go in for a total renovation of the PSP projects so as to enhance their life span for another 30-35 years.


The court upheld the decision of the KSEB  to go in for complete renovation and modernisation to infuse a new life span of 30 to 35 years to the hydro electric projects. It stated that non-consideration of Balanandan committee recommendations while awarding contract for a total renovation and modernisation cannot be seen as an ‘evil design’ on the part of the accused. The intention of the Balanadan committee was vividly clear as it had categorised its recommendations under various titles i.e. short term development, long term development of hydro electric schemes, future prospects of thermal generation, transmission and distribution system, tariff system, resource mobilisation and working of the KSEB. 




The Balanadan committee report was used by certain quarters to confuse even the Party sympathisers by propagating that Pinarayi Vijayan deliberately did not consider the report and went ahead with the agreement. It is to be noted that the high power delegation led by Pinarayi Vijayan visited Canada in October 1996 and held discussions with the SNC Lavalin, CIDA and EDC officials. During the discussions it was agreed to reduce the foreign loan from Rs 173 crore to Rs 157 crore and consultancy charges to be given to Lavalin from Rs 24 crore to Rs 17 crore. The original contract signed during the UDF period on 24th February 1996 had earmarked a higher amount in the form of foreign loan and consultancy charge and it was also categorically provided for sourcing equipments from Canada by availing credit from Canadian agencies, and the same would be arranged by the SNC Lavalin. 


The KSEB in its full board meeting held on 25th January 1997 decided to approve the proposal and subsequently an addendum contract was signed on 10th February 1997. The Balanadan committee submitted its report on 02nd February 1997 i.e., three months after the discussions held in Canada and a week after the decision of the KSEB. What is more, the supply contract signed on 10th February 1997 was an addendum to the original contract signed during the UDF period. The MoU and the MoA signed during the UDF period emphatically stipulated that any breach of contracts should be subjected to the rules and procedures of the International Chamber of Commerce, Paris and thus the LDF government was not in a position to cancel the contract at a time when the state was facing acute power crisis.


In fact, the CBI ludicrously echoed all the spurious arguments of the UDF leaders in its charge sheet, which was filled with illogical reasoning and unfounded arguments. The CBI consciously did not consider whether the LDF government could cancel the already signed MoU and MoA on the basis of a subsequent report. When the normal life span of a hydro electric project is 30-35 years, how can the CBI question the decision to go in for a total renovation of the PSP, which are the oldest power projects in the state. The Balanandan committee itself had noted that Pallivasal is the oldest power project and Senkulam and Panniyar were built before 40 and 33 years ago respectively. The CBI was deliberately trying to mislead by projecting the disparity of amount earmarked in the agreement (MoA) and in the Balanadan committee recommendation by willfully concealing the fact that the reduced amount calculated was for short term crisis management measure and the amount settled in the MoA was for a total renovation. In their eagerness to unleash a scathing campaign against the CPI(M) and its state secretary, the anti-CPI(M) consortium and the right wing media deliberately hid all these irrefutable facts and willfully projected that Pinarayi Vijayan did not even consider the report of the Balanandan committee. But how could the premier investigating agency plagiarised all such painted stories in its charge sheet will remain a question unanswered.




It was indeed a huge task for the CBI to accuse Pinarayi Vijayan and to cover up the real perpetrators. It manufactured a highly colored irrational theory by stating how the conspiracy originated, flourished and mounted into a crime.  The CBI in its report (Para 10.4.3) conceded that the Congress leader and the electricity minister in the UDF government, G Karthikeyan, was the founder of the conspiracy while entering the MoU on 10th August 1995. Even though the report unambiguously affirmed that the conspiracy was initiated by G Karthikeyan who had executed both the MoU and MoA, the CBI conveniently arrived at a conclusion that ‘no evidence is forthcoming for his direct involvement in the case’. And then it pathetically embraced another theory that suited its story and the desires of its political masters. The MoA signed during the UDF government categorically stated that the finance for the purchase has to be arranged from Canada with the condition that equipment also should be sourced from Canada. Allegations were also leveled by the CBI, for choosing the MoU route instead of a global tender route. The CBI further accused that the PSP contracts involving a capital expenditure of Rs 243 crore were split into three separate contracts (Pallivasal, Sengulam and Panniyar power projects are three separate projects commissioned at different times) so as to avoid the techno economic clearance of the Central Electricity Authority, New Delhi. Techno economic clearance of the CEA is required for any power generation project that entailed a capital expenditure of more than Rs 100 crore. It is an irrefutable fact that all these allegations, including the draft contracts, prepared and forwarded by the SNC Lavalin were signed with dishonest intention; no feasibility study was carried out by the KSEB regarding the renovation of the PSP; no prior decision of the full board meeting of the KSEB was sought etc. But these are attributed to a period on or before 24th February 1996, during the period of the UDF government. Hence the CBI promulgated the theory of hatching the conspiracy at one time and subsequent joining of the conspiracy at different times. 


Even though the CBI was in agreement with the fact that the MoU and subsequent contract was signed, during the period of G Karthikayan, with his knowledge and was aware of the contract, the CBI could not find any evidence against him but found plenty of ‘evidence’ against Pinarayi Vijayan and made him responsible for all the omissions and commissions occurred during the period of the UDF government. Even the court asked how Pinarayi Vijayan, who was not in the scene at the time of the MoU, was made an accused and why G Karthikeyan, who was the power minister at the time of signing the MoU, was not included in the list of accused. It vividly vindicates the fact that the CBI investigation in the Lavalin case was not at all intended in pursuit of truth as its logo states, but to keep the CPI(M) and its state secretary Pinarayi Vijayan under the smokescreen for as long as possible. It did not show any Industry, Impartiality and Integrity, as its motto states, in pursuit of the truth. The CBI advocate time and again could not find an answer for the many questions raised by the court during the arguments stage. There can hardly be any other charge sheet filed by the CBI without any material facts to substantiate its phoney allegations as in the Lavalin case in its five decade long history.




Kerala was facing an acute power shortage during 1995-96 just before Pinarayi Vijayan took charge as minister for electricity in the subsequent LDF government. Prolonged power cuts were imposed on the industry and it was 100 per cent power cut in the case of HT and EHT industrial units in the state. This situation resulted in a heavy financial stress, with approximate losses of around Rs 6000 crore. Hours long load shedding for domestic consumers was also imposed and no shops and establishments were allowed to use electricity in the night time. It also resulted in unprecedented misery for workers engaged in industrial sector throughout the state as they became jobless with units closing down. To put it briefly, the state was under total darkness during that period.


After assuming the office Pinarayi Vijayan, as per the decision of the LDF government that gave priority to the power sector, initiated measures to implement numerous power projects and also to expedite the ongoing works of various power projects wedged under red tape. Consequently most of these projects were commissioned much before the stipulated time. It is to be noted that during this period numerous power projects were commissioned and the LDF government did not opt for the MoU route for any of the projects. Contracts were executed based on global tenders. However, the UDF government opted for the MoU route for all the 13 power projects it had initiated during its tenure. The LDF government had to cancel all those MoUs except the PSP project since both its MoU and MoA were executed by that time. The LDF government’s determined decision added with the consistent intervention and effort of its minister Pinarayi Vijayan resulted in adding of an additional 1081 MW electricity in the power grid with the then existing capacity of 1491.5 MW,  an increase of 72.4 per cent! And obviously, this added power is more than the total power generation after the formation of the state of Kerala. And subsequently power cuts imposed during that period was lifted which resulted in the revamping of the dwindling industrial sector in the state. Pinarayi Vijayan’s proficiency as a minister was well acclaimed by the general public and the media. But after he became the state secretary of the Party, Pinarayi Vijayan became a target of the media and the anti-Marxist camp so as to attack the Party.




It is a fact that the court did not take into consideration whether any one is responsible for enabling the SNC Lavalin to back out of its promise of arranging grant for the Malabar Cancer Center (MCC) project. And of course the CBI, as the whole episode was stage-managed, cannot go into that part to arraign the real perpetrators. The court made it clear that even with a legally binding contract with the Lavalin, such an obligation cannot be enforced as the MCC project was not a consideration for the PSP contract. In fact, the grant offered was the foreign aid grant. Canada and some of the other developed countries have been using their foreign aid grants as an incentive to obtain commercial deals and supply orders for their MNCs. The MCC project was offered by taking into consideration that the Lavalin has a 40-year association with the government of Kerala by cooperating with many power projects including the Idukki project. Immediately after the verdict the chief minister Oommen Chandy asked with extreme frustration as to who would be held responsible for the huge financial loss to the state in the SNC-Lavalin deal as the MCC had not received the promised assistance. He added further that the reason for this has to be probed and those responsible for it were answerable to the people. Hence even after the court verdict, he echoes the same argument which the anti-Marxists repeated baselessly during the last one decade and odd. 


The court observed that the Lavalin had spent Rs 12.05 crore for the MCC project and commissioned the first phase of the hospital by 2001. The MoU was enough for the Lavalin to spend its share for the hospital during the LDF period. The CBI charge sheet itself clarified that Lavalin had not promised to spend its own money but arrange grant from the CIDA and EDC. The MoU was renewed during the LDF period and subsequently on one occasion during the subsequent UDF government. It is vividly clear that Lavalin had backed out of its promise not in the absence of a legally binding agreement as the CBI argued, but the subsequent UDF government consciously did not make any effort to get the grant. It was extremely important to execute the MoA to be produced before CIDA for arranging grants for the MCC. But the UDF government in spite of repeated requests from the Lavalin to execute the MoA deliberately declined to do so for its rigid political gains by jeopardising the MCC project which was initiated by the LDF’s Nayanar ministry.


The chief minister Oommen Chandy who served as a minister in the then UDF government is bound to answer certain questions before trying to make a smokescreen with outlandish comments. Why did the UDF government pave the way for the Lavalin to back out of its promise? What was the intention of the then UDF government for being insensitive towards the repeated requests of the Lavalin to execute the MoA which was essential to arrange grant? Answers to these questions are enough to clarify the spurious comments made by the chief minister. What is more, the minutes of the implementation committee meeting of the MCC project held on 14th November 2002 emphasise the fact that the Lavalin had requested the government to execute the MoA even after the expiry of the MoU. The minutes show that the senior vice president of the Lavalin in the meeting insisted to get the MoA signed as they have difficulties to approach the donors without a MoA. It is also apparent from the minutes that the Lavalin representatives had accepted the changes suggested by the government to the MoA. Even then the UDF government did not execute the MoA and its reason is apparent in the editorial written by the Malayala Manorama then, criticising the political plot to destabilise the MCC project.




Irrespective of all these irrefutable facts, the UDF and certain vested camps deliberately leveled unfounded charges against Pinarayi Vijayan. On the basis of certain remarks in the CAG report – which could have been avoided if the KSEB clarified properly on certain queries raised by the CAG – the UDF government, when it was facing a severe political crisis on 06th March 2003, ordered for an inquiry by the Vigilance Department and the state vigilance after three years long enquiry submitted its report in February 2006, just prior to the state assembly election. When it was found that the Vigilance Department did not indict Pinarayi Vijayan in the case,  the desperate UDF government removed the Director of Vigilance Department and decided to go for the CBI enquiry as an out of agenda decision on 01st March 2006, the same day that the election was declared. It is to be noted that the UDF government had objected in the court few days before the Vigilance Department submitted its report responding to a PIL filed in the HC. But when it found that Pinarayi Vijayan’s name was not included among the list of accused, the UDF government made an astounding U-turn and declared the CBI investigation.


In order to accomplish its political plot the Congress leadership was not reluctant to even influence the governor’s office. When the CBI sought sanction to prosecute Pinarayi Vijayan, it submitted its report directly to the governor which they are not entitled to do as per law. The governor forwarded the report to the state government for the advice of the council of ministers and the government forwarded it with relevant documents to the AG so as to seek legal opinion. The AG in his legal opinion advised the government not to sanction for prosecution as no prima facie case was seen against the accused after examining the CBI report in the light of all available documents. The cabinet on the basis of the AG’s legal advice informed the governor not to provide sanction to prosecute. But the governor, who is bound to act according to the advice of the cabinet, accorded sanction for prosecution by violating all the legal norms. All these heinous deceptions substantiate glaringly that how this unwarranted political plot emerged, proliferated and built up to facilitate to attack the CPI(M) by unleashing the offensive against its state secretary with scathing campaign.


The kind of spiteful campaign unleashed to target Pinarayi Vijayan with spurious unfounded and tarnished tales received enthusiastic support from the right wing media in the state. It was propagated by the media that Pinarayi Vijayan secured Rs 100 crore from the Lavlin deal and built Kamala Exporters International (Pinarayi’s wife’s name is Kamala) and the company has a turnover of Rs 100 crore and Pinarayi visited frequently to Singapore and Dubai for the sake of the said company! Pinarayi’s wife Kamala was actually working as a government school teacher then and has since retired from service. Such nasty propagators were not hesitant to drag the name of Comrade Harkishan Singh Surjeet, the then general secretary of the Party, into the campaign by propagating that his son was the middle man in the deal and his Canadian connection led to this. Lavalin’s consultant for the MCC project, Technicalia, a Chennai-based firm, was propagated as Pinarayi’s benami establishment and all the money that Lavalin spent for the MCC project was swallowed by Technicalia! It was further propagated that the Kairali TV was founded with Lavalin money and an air conditioned flat is built up at Thiruvananthapuram with corrupt money. All such scathing tales need not be explained in great detail here except to say that all these were found to be unfounded and deliberately propagated.


The right wing media that celebrated repeatedly such forged tales with banner headings and ‘Breaking news’ items had never bothered to expose the heinous game plan behind those tales and is even reluctant to publish the truth now. Such malicious campaigns were not capable of harming the communist in Pinarayi Vijayan. He had never solicited the media to defend himself and to explain his part until the court verdict was pronounced. He stood firmly with an unbending will amidst all round attacks unleashed by the anti-Marxist syndicate. The ruling bourgeois leadership that sunk in the mud of corrupt practices, in their eagerness to show that others are also like them, rallied all the anti-Marxists under a single umbrella to attack the CPI(M) by unleashing unprecedented offensive against Pinarayi Vijayan. The Lavalin case was used by the UDF as a trump card whenever it faced political crisis. In the long pages of history one can find numerous fabricated tales being used to attack the communists. The Lavalin case and the conspiracy behind such a manufacturing story also add another chapter in the history of the McCarthyian model of communist witch-hunting. When the castle of mystery built up on the fabricated tales is falling apart, the conspirators have no other way but to find their shelters in dark holes and to hide themselves until they come up with more coloured tales.