Friday, February 20, 2009

CIDA Internal Audit finds irregularities

A CIDA program that doled out almost $500 million over a 10-year period to thousands of Canadian companies for development projects has been slammed in an internal audit that found the vast majority of projects weren't actually implemented.

According to the internal evaluation conducted last year and quietly released on the aid agency's website in December, CIDA-INC disbursed $1.1 billion in support of Canadian private sector initiatives in developing countries from 1978 to 2005. A total of 8,138 proposals were approved and funded.

However, the evaluation team found that only 972 projects had actually been implemented, raising serious questions about what happened to the hundreds of millions of dollars that were disbursed.

The evaluation team looked specifically at 721 projects approved between 1997 and 2002, finding that only 112—about 15.5 per cent—had been implemented, while 188 had shown no signs of progress in three years and the remainder hadn't gotten off the ground.

No Call For Tied Aid

For decades, Canada and other donor countries sought to ensure maximum domestic benefit for their aid dollars by stipulating that companies or products from their own countries benefit through the contracts. This is called "tied aid" and, in recent years, there have been moves to untie aid to ensure instead maximum benefit for the recipient country.

Some more info on CIDA :

Call for overhaul of CIDA strikes chord: senator
The Liberal Government Boondoggles Go On and On

It is significant that some of Canada's largest and most lucrative companies receive grants from CIDA under its controversial Industrial Cooperation Program. Bombardier, Trans Canada Pipelines and SNC Lavalin, for example, have all received millions of dollars from CIDA between 1996 and 1999. Significantly, they are among companies which have given generous contributions to the Liberal party. (See Reality, November/December, 1997, "CIDA's Gender Seeking Opportunities Abroad," p. 13.)

According to MP, Keith Martin, the Reform Party's Foreign Affairs Critic, these examples of the financial incompetence of CIDA are only "the tip of a very large iceberg."

Wednesday, February 11, 2009

Why fund KSEB ? Hidden agenda of CIDA/EDC

Here is what Canada has to say about their KSEB engagements.
An Energy Infrastructure Services Project, in which Montreal-based SNC Lavalin will assist in improving energy systems planning and environmental management at the Electricity Board in the Indian state of Kerala, and possibly neighbouring states, so as to prepare the utility for privatization. The privatization of power generation, transmission and distribution activities of state electricity boards is a vital part of India's economic liberalization program. CIDA will contribute $13.8 million to the project over five years.
By CIDA supported initiatives
"These agreements open the door to Canadian firms to assist the Indian government in carrying out its economic reform program," said Mr. Boudria. They reflect the important role of the private sector in India's long-term economic development."
Now we have seen how Canadian firms help us to help them.

CPI-M must apologize to people of India to have fallen into this trap. Show the courage to accept your mistake.

Remember 3 CPIM workers lost their lives in Andhra fighting against power sector reforms.

Now you can understand how **spelling mistake** appeared in the agreement, which made KSEB into a company.

Saturday, February 7, 2009

Letter of Com Balanandan

Janasakti magazine published a letter claimed to be written by Com Balanandan.

Donate More Documents.

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We will be publishing more documents and commentaries.
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Tuesday, February 3, 2009

High voltage Slander Campaign - SNC KSEB Contract

Here is much awaited SNC Lavalin - KSEB Contract.
- Donated by a well wisher

There is a ‘High voltage Slander Campaign’ going on with utter lies and half truths to defend a corrupt deal. Hence we have decided that the public should be allowed to make their own judgment. We publish the entire agreement – both consultancy agreement as well as the supply agreement. Please find some explanations which made us feel Pinarayi is guilty. If you find other arguments from these documents, please write back to us.

SNC Lavalin and KSEB entered into 3 separate contract for their projects
in Panniar, Sengulam and Pallivasal. Separate contracts were created so that
each contract will be below Rs 100 Crores. For contract above Rs 100 cores,
KSEB require CEA clearance.

In Feb 24, 1996 original contract was signed by UDF govt.

Scope of the work:

The Scope of work is clearly specified and it says that the scope of the project is just advisory in nature. Section 2 talks about “scope of Work’ and in section 2.1 “Provide the technical services for Mangement, Engineering, Procurement and Construction supervision so as to ensure timely completion of the project within the agreed timeframe which is 3 years from the Effective Date of Contract”.

Payment :

The payment options talks about ‘renumeration’ and is being billed in man hours for the actual manhours spend on this project.(Annexure G)

Section 7 ‘ Renumeration and Payment ‘ clearly speaks about a payment ceiling and section 7.1(b) says that unless a revision on the scope of the project is made "Payments under this contract will not exceed a ceiling of C$4205000".

From the above it is clear that the ‘original agreement signed by UDF was just for a consultancy service, to be billed against actual man hours spend on the project subject to ceiling of Rs 26 crores. SNC Lavalin was to inform us when our cumulative payments reach 80 percent of the ceiling. But there was a provision that on mutual consent either party could revise this agreement which would take off this ceiling on payment also.

Termination of the contract :
Clause 13 talks about the effective data of contract. 13.1.1. tells us that if govt does not take the loan from EDC contract will become invalid. LDF government clearly had an option of not going ahead with the contract signed by UDF.

Annex A of the document gives the Scope of Work.
Section A.3.4.2 says that Tender Documents will be compiled by SNC Lavalin.
Even after availing EDC loan, tendering within Canada was very much possible. The loan conditions of EDC forced us to procure goods from Canada. But it didn’t force us to give the supply contract to SNC Lavalin. UDF was planning to issue a tender within Canada. It was part of the consultancy agreement that SNC Lavalin should help us with the tendering process. But Pinarayi Vijayan just awarded this contract to the consultant middleman without tendering thereby allowing SNC Lavalin to avail benefits or in other words commission.

Annex B Cost Estimate of Canadian Financed Goods and Services

This was an indicative list made by SNC during UDF period. Document says that "A more refined budget for Canadian financed goods and installation will be developed by estimator of the project team." UDF did not fix any rates.

Annex C

Annex G

Here comes the new contract of Mr Pinaray Vijayan

Most interesting part of the new agreement

KSEB becoming a "Company" ???

Rest you can read. See how the rates got reduced.

LDF/Mr Pinaray brings a new clause to the contract
"in addition to the agreed upon consultancy services xx reduced scope of supply of Canadian sourced electromechanical equipment for the Project"

More Reference Documents

Watch this space for the SNC-KSEB MoU/Contract.

Our E-Mail account was blocked few days back.
CIA ? KGB ? ;)
We can not receive your e-mails. If you have any comments post the same on our blog. Private comments wont be published.

Saturday, January 31, 2009

ProbeInternational Following SNC Lavalin

ProbeInternational a Canadian watchdog holds a lot of information on SNC Lavalin. They have demanded Canadian government to coorporate with Indian law enforcement agencies. Read this article : Indian scandal has Canadian roots

Canadian Crown agencies that help to fund Canadian business projects abroad – in particular the Canadian International Development Agency and Export Development Canada – should assist the Indian authorities with the case.

“These agencies may hold key information,” Patricia Adams of Probe International was quoted as saying. “And Canadian international affairs officials have long lectured Third World nations on the need to root out corruption.


“The last Canadian federal government, which was in power when this deal was struck, fell because of corruption. I hope the current government will take a different approach.” At least two former ministers in charge of Kerala’s power supply are being implicated in the affair which, which local political commentators and newspapers is calling a “clear case of political corruption”.
In 1998 SNC Lavalin was part of a Canadian-Pakistani consortium accused of bribing officials of Benazir Bhutto’s government so it could overcharge for electricity.

The consortium built a $160 million power plant in the Punjab and supplies electricity to the area. Pakistan is moving to cancel the contract with Southern Electric.

B.C. Hydro reportedly loaned $1 million to the chief executive officer of Southern Electric. Pakistani officials say that money has disappeared.

About Probe International

Probe International is an independent environmental advocacy group that fights to stop ill-conceived aid, trade projects and foreign investments. But more importantly, we work to give citizens the tools they need to stop these projects – the rule of law, democratic processes, and honest and transparent accounting.

For more informations on SNC Lavalin and its ways of operations

Friday, January 30, 2009

Study reports on SNC Lavalin -academic work

KSEB contract for SNC-Lavalin Malabar Cancer Centre or kick-back?
By K Vijayachandran

In view, there were three fundamental defects in the agreement signed by the KSEB under the UDF regime: (1) the price agreed to for the supply of goods and services was quite high, considering the scope of the R&A programme; (2) contracting the consulting firm for the supply of goods and services, specified by it, was procedurally wrong and lacking in transparency and (3) the need for external consultancy was only marginal and most of the engineering services could be organized internally within the KSEB organization. Mr Sambamurthy had conveyed the above understanding to the KSEB Chairman, the Vice- Chairman of the Planning Board, as well as the Minister. We had also used our influence, individually as well as jointly, to get from BHEL its proposals and quotation to do the job on a turnkey basis with or without credit from the Power Finance Corporation. As I remember, BHEL's price was around Rs 100 crore, much less than that of the Canadian firm.


Mr Sambamurthy(Ex-CEA Chairman) had later informed me that the Minister himself was favouring the Canadians because they had offered to set up a Cancer Centre in the Chief Minister's constituency in Malabar at a cost of Rs 100 crore. Trading a misconceived power project contract for a healthcare institution in the Chief Minister's constituency was a new experience for Mr Sambamurthy and in his view it was a clear violation of the spirit of the Electricity Act 1948, of which he had been the custodian for several years. He had cautioned that it was nothing short of political corruption which would get exposed in no time and could do immense damage to the movement that we all believed in. Mr Varadachary, IAS, a close friend of mine and then Power Secretary, had told me that for expressing such concerns on the file the Minister had openly branded him a madcap.
Who was supposed to pay for the MCC, by what instrument, when and for what purpose? If already Rs 11 crore was paid as reported by The Hindu; who paid it, who received it, who spent it and who has accounted for it? MCC is a Government organization with the Chief Minister as Chairman.

A Study of the Indian Power Sector
K. P. Kannan and N. Vijayamohanan Pillai

It is worth mentioning that even while being under the clouds of a corruption case, the very same foreign contractor was awarded the modernisation works of 3 old hydropower plants, viz., Pallivasal, Panniar and Sengulam, and that too through a MoU only, without calling for international tenders as per guidelines! Current estimates put the costs of such modernisation works at Rs. 1.25 crores per MW, whereas the contract to SNC was given at a cost of Rs. 2.42 crores a MW (Rs. 280.5 crores for 115.5 MW of the three plants) (Malayala Manorama daily 7 February 2001). Assuming the validity of these estimates, a new hydro-plant of more than 110 MW could be constructed at this cost!

Wednesday, January 28, 2009

നൊണയറിയാന്‍ നേരത്തെയറിയാന്‍

  1. It was said that the Lavalin deal was worth 376 crores . But now it is said that the total payment made to SNC Lavalin was only 185.1 crore. So the story about crores keep fluctuating….

The CAG classified the total loss considering the defective machines brought in, the loss due to lack of production for some period etc. Deshabhimani is talking as if there is no loss due to lack of production. The finance minister says it is all ‘mind arithmetics’. When he says each harthal is a loss of these many rupees, what is he saying?

CBI is now talking about the loss from our pockets, without considering the loss of money which would have reached our pocket had things been undisturbed.

And by whose standards is 185 crores negligible?

  1. Justice KrishnaIyer says CBI is trying to target people

Gone with the next wind. KrishnaIyer tried to be quoted out of context and got what it deserved.

But this newspaper didn’t even give his clarification after having misquoted him as the head news the previous day. None other than the resident editor trapping Krishna Iyer.

This is their opinion regarding CBI also. If they feel its favorable, then all praise else backstab. If CBI is so bad why did the cabinet complain of the center government not imposing CBI investigation in Marad case, just the previous week? What was the demand for the Muthanga struggle?

  1. UDF agreement in 1995 is the ‘Original Agreement’.

Yes. UDF agreement was original and was a 24 crore agreement for consultancy. LDF agreement was ‘Duplicate’ and is a 285 crore agreement for supply of goods. LDF agreement is termed duplicate as the contract for supply of machines were given to a consultant middleman and not the manufacturer.

  1. G Karthikeyen should have been the first accused- Thomas Issac

No debate . Let him also be booked. But will all murderers be let off till Sukumarakurup is booked?

But here the finance minister is saying that the deal is corrupt. Just that he feels there should be some more accused. No debate on this and the CBI might do so when the investigation is over.

  1. Global Tenders were not possible as the ‘original agreement’ was signed by UDF”

Preparation of tender papers were part of the Consultancy agreement signed by UDF.Will Deshabhimani say that it was mandatory that goods should have been procured from SNC Lavalin? No ,even they can’t say so as SNC Lavalin does not manufacture anything. That means it has to be procured from some firm which is a manufacturer. They actually procured it from Alstom, Canada. Why didn’t we procure it from Alstom? The question is instead of we doing the procurement why was it handed over to SNC Lavalin thereby spending much more as commission.

Even if we agree to avail loan from EDC, we could have called for tenders from Canada. Then we could have procured these goods from Alstom or any other firm there at a much cheaper cost. But instead we decided to accept loan with conditions against the proclaimed policy, used middlemen and ended up paying huge commission .

Having done that, why did we again make the payment for consultancy and supervision? Whom did we expect SNC to supervise? Themselves?

  1. The news of Pinarayi Vijayan being one of the accused appeared in many newspapers much earlier. This is enough evidence for connivance between the investigating agency and these newspapers.”

Deshabhimani says they will tell the truth, early. In the Brahmapuram case, it reported weeks earlier that Padmarajan is going to be booked. Did it connive then? There are many such examples. They are talking as if there is no investigative journalism.

A week before Pinarayi was formally named an accused, Deshabhimani published an article which appeared in People’s Democracy 6 months back, in the front page. This article was saying CBI is baised. Why was that article reproduced, then? Why did it find its way to the front page rather than the usual edit page? Does this mean that Deshabhimani also tried to connive with CBI but failed?

  1. Had LDF decided not to proceed with supply agreement, we should have given huge compensation. Hence Balanandan report could not have been honored.”

This is an utter lie. This is as good as saying if we get an architect to sketch for a house, we should construct it. No consultancy report can force a democratically elected government. We should realize that such governments are higher than not just NHPC but SNC Lavilin’s report also.

Also, It is like saying we continued the same mistake that UDF did because otherwise the UDF would have been exposed.

And about the compensation(if at all) being ‘huge’, after all the project itself was worth only 24 crores and we ended up loosing much more.

  1. If we had decided not to proceed with supply agreement as per Lavalin’s consultancy report we could not have carried out the renovation work in the near future”

This is again not true. And this contradicts their above argument. Balanandan committee was suggesting that such total Renovation was not required in the near future. So here they are saying they could have stuck to Balanandan report.

  1. Not just that, if signing the agreement with SNC was delayed, then the target of increasing power generation would also have been defeated.”

Not even one unit was additionally generated. CAG has remarked that the renovation failed in even achieving the pre-renovation generation capacity .

The target also was not enhanced production but just replacement and installation of new units to ensure same production levels. The reason cited for the complete renovation was that the fair life period of these machines were only 35 years. Hope they will not tell Sreemathy teacher that in human beings ageing starts at the age of 25.

In fact suggestion by Balanandan committee would have enhanced production but that suggestion was ignored.

  1. NHPC has opined that the rates are comparable with international rates”

Another lie. NHPC has said the rates are comparable with international rates “keeping in view the soft loan with Grant element”

  1. NHPC was entrusted with the responsibility of crosschecking the rates shown in consultancy agreement before proceeding with that agreement further.”

Again a lie. NHPC was consulted only 8 months after the Supply agreement was signed by LDF government.

  1. The democratically elected Cabinet is higher than NHPC”

Then why NHPC at all….. If that is the case, since MD is bigger no auditors are needed in any firm.

  1. It is said the agreement was broken into three to bypass CEA. But that was because these are three different projects. Else they should have said all projects in Periyar are one.”

How was it negotiated? How was it written in files? Why were no other projects in Periyar clubbed with this?

  1. Criticising something after it has obtained cabinet approval is anti-democratic. CBI just need to enquire if there was cabinet approval. It need not go beyond that and check whether a minister has mislead the entire cabinet.”

The statement makes everything very clear…. Apply for a ‘mappusakshi’ …

  1. The grant of 45 crores was made 98 crores. But this is not appreciated.”

They could have made it 980 crores …. What use if nothing is paid?

  1. Thomas Issac in Mathrubhumi (29/01)“Original agreement, Consultancy agreement, MOU, Supply agreement, Final Agreement ... It is confusion allround . This is what anti-party forces are aiming for”

Who used all these terms? Just search the newspapers of the previous one week. And If it is Thomas Issac and co, you know what was the intention now.

  1. Issac Mathrubhumi (29/01) “ The issue is regarding the oldest projects Pallivasal(1940), Senkulam (1954) nad Panniar (1963) renovation. The common understanding is that after 25-30 years, renovation and replacement should be done. Balanandan report was received only a few days before traveling to Canada for signing the final agreement “

This means Pallivasal was 57 years old, Sengulam 43 and Panniar 34 years old. This itself revokes the ‘common understanding’ that after 25- 30 years the stuff should be replaced. If he still keeps that ‘common understanding” then he should have alook at the generation capacity after renovation.

About receiving the report only days before signing the final agreement, that is another way of saying the final report was signed just 8 days after Balandandan committee submitted its report. That is Issac for you. Would have been nice if he could also tell us the reason for the hurry, especially after appointing a committee and asking them to give a report in 2 months. Especially since the project was just because of the ‘common understanding’ that 25-30 years it should be replaced and not for increased power generation. Why was this ‘common understanding’ lacking in 1987? And would have been great if he had also said that the cabinet approved this only after one year.

  1. Issac: I trapped Karthikeyan and he finally agreed After having availed loan from Canada, we cannot go for global tender.

No consultancy can force us to avail a loan. The loan from EDC was availed by Pinarayi.

The consultancy report suggested this loan but we decided in 1996 when the ministerial delegation visited Canada and availed it only in 1996 . This portion is hidden purposefully. Then what Issac said is true. After having availed EDC loan you cannot go for a global tender but you can go for a tender in Canada.

The machines were procured from Alstom Canada by SNC Lavalin. Instead why couldn’t we procure it from Alstom directly? Or some other Canadian firm? Which clause in EDC loan conditions prevent this? Can Issac make this clear?

  1. Neriamangalam, we had signed the MOU. But no consultancy agreement. We cancelled the MOU and went for global tender. But the court ruled in ABB’s favour”

Very True. But the court clearly said it is because the project plan was not changed at all. Here we were rethinking about the whole project plan which is clearly our prerogative.

If we had stuck to Balanandan report, no one could have stopped us or gone to court.

The consultancy agreement was only worth 25 crores. So the argument that supply was part of it is absurd.

  1. Pinarayi reduced the rates as shown in the table and increased the grant….”

Me : “How much did they offer?”

Issac/Pinaray : “45 crores”

Me : “You bargained and they increased it .Right?”

Issac/Pinaray : “Yes , I made it 98 crores”

Me : “Good, What did you do with that?”

Issac/Pinaray :“We paid Technicaliya 8 crores for building, they we got cheated by SNC and Karthikeyan/UDF”

Nice Bargain!!. And the finance minister out defending it. God save your own country.

(After all, he knows which areas not to thread. Saying nothing about Malabar Cancer Center and Technicaliya )

  1. What about the comparison given by Thomas Issac? The rates which UDF agreed was reduced.

Thomas Issac who has made many tables in his essays knows best that he should compare between two equals. UDF agreement required us to pay only 24 crores to SNC Lavalin. Then what 182 crores is he talking about? So he is comparing between a brochure price and the price we actually paid.

  1. Karthikeyan should have been among the accused

Agreed. Are you saying Pinarayi is as good as Karthikeyen?

23) After Renovation we got power worth 1100 crores – Deshabhimani (29/01)

Wait for another 5 years it will become 2200 crores . But the author has published another tableand is not as shrewd as our finance minister. The power generation before during the project and after the project is also shown. Just take a look at the power generation from 1994 to 1998 , from 1998 to 2002 and from 2002 to 2008. The table .

clearly tells you what happened. Poor guy, I only hope he does not loose his job.

24) The total amount spend for the project is only 333.8 crores. Then how can CAG say we lost 376 crores? –Deshabhimani PMManoj (29/01)

Just ask your colleague Mohandas. In his report mentioned in the above question, he has given the table which clearly tells you the generation from 98 to 2002 decreased. This loss is added to the 338 crore by CAG. If you don’t understand just ask Mohandas how he got 1100 crores. Before quoting him and asking TVR shenoy whether he will be shocked you should have known this.

25) Karthikeyen went to Canada . As a follow up Nayanar and Pinarayi went to Canada and continued it.

Poor Nayanar. Please spare him. Why is Deshabhimani hiding the fact that Pinarayi visited Canada along with the first accused and that Nayanar went there only after the deal was finalized.

26) Neriamangalam project shows, getting out of the consultancy agreement was not possible.

About Neriamangalam, the reply is given above in question 19. But just have alook at questions 7 and 8 in this list. The same author has said that if we had gone by Balanandan report then we could not have carried out the same project in the near future. Can he explain these two statements? Here he says we could not get out at all. But there he says if we had got out of it then the total renovation could not have been done soon after. This statement is because of the Neriamangalam verdict. In fact that verdict is an argument for those who say we should not have gone ahead with the project. Now they are making a dog out of a goat.

27) “We should have gone to Paris to fight it out in the court “

That is if we had cancelled the consultancy agreement and if we had refused tomake the payment of 26 crores. Then we should have gone to Paris and fought it as per Indian laws. But not if we have made another commitment of 185 crores.

28) “ The laws of Ontario province was made applicable in the agreement between KSEB and EDC for the loan” – PM Manoj Deshabimani (29/01/09) ‘Maram Peyyumbol’

You have let the cat out.

That Global Tenders were not possible is a loan condition of EDC. Who signed this loan agreement? If the LDF government did, who put us ina situation where Global tenders are not possible? Even you will not say it was a condition imposed by SNC Lavalin and not EDC. Because not just NHPC , a foreign consultant like SNC Lavalin also is not above our Cabinet.

Can CPI(M) avail loans with such conditions?

Did Sivadasamenon’s Finance ministry say that this particular clause is “something which no sovereign state can agree”. Did the law ministry also support it?

Did Pinarayi write that Varadachary is a madcap in the file?

Now that you have agreed that EDC loan and thereby money for the project was gained by LDF, will you stop confusing people about Original, duplicate….

29) Balanandan committee was not expected to consider this project. The Nayanar ministry approved this project because it had no other option but to go with it as the consultancy agreement was signed and because the power generation should be improved.

That Balanandan committee didn’t rise or fall as per your expectation is understandable.

And it is also true that Nayanar ministry had no other option but to approve this. But not because the consultancy agreement was signed. The cabinet considered this only on March 3, 1998 where as the agreement for supply was signed in February 10, 1997 itself.

Hence the ministry had no other option. Let Deshabhimani contest these dates. About power generation, the table of power generation published today tells the story. And Thomas Issac’s article clearly says it was because of the ‘common knowledge’ that these machines should be replaced every 25 years that we went with the project.

30) “The price list is given in the UDF agreement in 1995 itself. NHPC was consulted to see if the price is justifiable. They said it is comparable to international standards. Other than taking this in face value what else can a government do?” PM Manoj Deshabhimani (29/01/09) ‘ Maram Peyyumbol’

Now you ask “ other than taking NHPC on face value what else can a government do” but 2 days back you and Mr Prabha Varma said “ NHPC is not above the elected government”. (Please don’t loose your stability)

When NHPC was consulted, did you send them the ‘reduced price’ as against the price listed in UDF agreement?

When was NHPC approached? They were approached in October 1997, 8 months after the agreement for supply was signed. They submitted the report only on Nov 1997.

Was NHPC given the technical specification asked for? NO. they said in the final report that even after repeatedly asking for it the technical specifications were not given without which they could not evaluate the price.

Did NHPC say the prices are comparable? Yes But only because of the Grant element.

Was the cabinet apprised of this and presented the report of NHPC? No, relevant portions were purposefully hidden says CBI.

31) That KSEB is referred to as a company is just a typing mistake

The KSEB officials who found their way to the accused list and others missed it out is a joke. It was very clearly said “company registered under companies act of 1956” and was not just a mere word.

Could you also explain us what was the KEISP (Kerala Energy Infrastructure Services Project) which is clearly referred in the minutes of the ministerial delegation which visited Canada ? Did it say of dividing KSEB into different cost centers and forming a company?

32) “When we buy a bulb for home, we can buy Chinese stuff woth Rs 500 or a Japenese one ... Casting opinion without knowing its technical side ... you can just stretch Yourselves”

This is a revelation. You should think about this before saying the 26 member expert committee whose suggestions helped Kerala overcome the acute power crisis didn’t have the expertise to look into this particular project.

Some Questions and Answers

Was the project done in undue haste?


  • The project was initiated disregarded the opinion of Central Electricity Authority (CEA ).

  • The fact that performance factors in these power houses improved from 4867 in 1981 to 4919 in 1994 was also ignored

  • This contract was signed ignoring the opinion of Balanandan committee . Mr Balanandan was a PB member of CPI(M) then. And more importantly he headed a 26 member committee of experts in this sector who were appointed by the same LDF Government to overcome the energy crisis here.

  • The deal with SNC Lavalin was finalized just 8 days after the Balanandan Committee submitted its report.

Was this undue haste an attempt to solve the power shortage in the state?


  • The reason cited for proceeding with such a contract was that the fair life period of machineries in these power stations were over. The aim was just replacement and not enhancement.

  • Balanandan committee had suggested just replacement of some parts and a new 40MW power station as “ the most important short time measure ..” for the power crisis. This was completely ignored which clearly proves that resolving power shortage was not a consideration at all

In this undue haste, were procedures followed (by LDF Govt)?

NO. Instead they were deliberately bypassed.

  • To bypass the condition that any contract above 100 crores should be approved by the CEA, the project was divided into three.

  • The reasonability of the prices should have been ensured with NHPC (National Hydro Power Corporation) . This was not done. After signing the contract and failing in an attempt to get the price ratified by a subcommittee within KSEB itself, NHPC was asked to verify the reasonability of the price. But NHPC was not furnished with the necessary specification even after repeated reminders.

  • Like in the case of Bofors, in which we alleged that there were middlemen, here the supply project itself was signed with middlemen. SNC Lavalin is not a manufacturer but only a consultant. Their commission (for buying and supplying machines from the manufacturer) itself cost us huge money.

Was Pinarayi and the LDF ministry bound by the UDF agreement with SNC Lavalin?

The UDF agreement was only for a consultancy(limited in scope, compared with LDF contract) . That didn’t require that we should have followed whatever the consultant suggests.

Were tenders called? Was tendering possible?

  • The consultancy agreement suggested that we can avail loans from Export Development Corporation (EDC) of Canada. It was not mandatory that we should have availed it.

  • But even if we decide to avail EDC loan, we could have issued a tender which satisfy the loan conditions. This was clearly specified in the consultancy agreement.

  • There was absolutely no issue in issuing a tender within Canada – even if it was decided that we will accept loan with conditions.

  • No one asked us or forced us to give the supply agreement to a consultant middleman. The argument that the supply agreement should have been given to SNC Lavalin itself, is simply a lie.

Was this contract signed with cabinet approval?


The deal was signed on Feb 10, 1997. The cabinet approved this project only on March 3, 1998. But here also the cabinet note was clearly misleading and said that 25 million Canadian dollars will be given for a Cancer Treatment Center.

The reasonability of the price was not checked with NHPC before signing the contract. But when it was checked later , did we find the price reasonable?


First of all the technical specification of the machines were not provided to NHPC despite repeated request. NHPC in its report sent to the Board on Nov 19, 1997 clearly says that the reasonability of prices cannot be checked without technical specifications. It says rates of Canadian equipments are on the higher side than Indian equipments. But it also states that “ ..the rates offered by SNC-Lavalin INC can be comparable to international prices... Keeping in view the soft loan with GRANT ELEMENT”. But now the advocates of this deal ignores this part and says that NHPC had assured the reasonability of the prices. And now we know that the Grant was not received.

The second time Pinarayi visited Canada, the delegation was led by the then CM Nayanar. So was Pinarayi just following Nayanar?


  • The initial delegation was led by Pinarayi. In fact Nayanar being part of this should also be viewed as part of the conspiracy as now it is being brought out as if Nayanar is the main culprit.

  • After the VS ministry came to power, Nayanar’s neice Pushpa who was working with Sreemathy teacher’s office was asked to quit just because she went and enquired whether it is possible to get the further grant amount for Malabar Cancer Center.

  • No papers show any active role played by Shri Nayanar in this. Yet it is a pity that the slain leader is being brought in as a scapegoat.

Was Malabar Cancer Center part of the project?

Yes. There are at least four documents which clearly states so .

  • The first of these documents is the minutes relating to the visit to Canada of a high-level team from the State headed by Pinarayi Vijayan in October 1996. The minutes of this meeting says “they had also agreed to assist Kerala for putting up a most modern Cancer Institute in the Kuttiyadi project area". It further says “SLI [SNC-Lavalin] provide experts to study the feasibility, cost, schedule, etc, of such a facility, including possible sources of financing;” [ October 12-29, 1996]

  • Then SNC Lavalin sends a detailed project report with a covering letter to the power secratery with a copy to the KSEB secretary. The letter signed by Klaus Trendl, vice president of SNC says “pleased to confirm that the Malabar Cancer Centre project is directly connected to the Rehabilitation Project [Pallivasal-Sengulam-Panniar] and can be availed on the satisfactory conclusion of the loan agreement with the Export Development Corporation of Canada and the exporter SNC-Lavalin." The project report confirms that the cost is 103 crores and that the project will be completed in 2001.( The LDF ministry had time till May 2001)[Dec 23, 1997]

  • The Secretary KSEB writes to the Power Secretary describing the salient features of the R&M project. He says The unique feature of this proposal is the grant offered for setting up a Malabar Cancer Centre... (that) will have a total project cost of Rs. 103 crores (the grant element shown as Rs. 98 crores)." [Jan 22, 1998]

  • The Cabinet note circulated to the council of minsters said it was also decided that, in addition to the loan, CIDA and other Canadian agencies will give 25 million Canadian dollars as grant to build a cancer treatment centre." [March 3, 1998]

All these documents say that commitment to MCC was very much part of the Panniar-Sengulam- Pallivasal Project. At least as per official records.

How did SNC Lavalin get out of this? If they didn’t stick to their commitments why did the subsequent UDF government pay back the loan?

The commitment from SNC Lavalin for the Malabar Cancer center was never made a legally binding agreement. But the loan we availed from Export Development Corporation (EDC) had bound us legally with enough government/ Bank guarantee and we had no other option but to repay it.

Why was the commitment on Malabar Cancer center not made legally binding? Was it overlooked or is that a case of clear connivance?

IT IS A CASE OF CONNIVANCE. Why? Because this was not made a legal agreement despite being cautioned. The KSEB Secretary in his report to the Power Secretary dated Jan 22, 1998 says “Since the grant component is not coming directly to the KSEB, the State Government has to ensure that the promised grant for the Cancer Centre materialises. M/s EDC has imposed a number of normal conditions for availing the export credit, including Government/Bank guarantee for repayment of the loan and the interest thereon. It is necessary that the Government also binds SNC-Lavalin in some such agreements so as to ensure that the release of the grant for the Cancer Centre is done pari-passu with the rehabilitation projects.

Not only that it was ignored, any reference about such a caution failed to find mention in the cabinet note.

Why didn’t the UDF ministry renew the MOU? Why didn’t they make it a legally binding agreement?

There were 2 MOUs. One which ensured that we will avail and repay loan to EDC and that SNC Lavalin will get payments from this loan amount. The second MOU on SNC’s commitment to grant us 98 crores for the Cancer center. The first MOU was made a legally binding agreement where as the second MOU was not. Instead the second MOU was renewed for another 6 months.Then another 6 months.

By the time Mr Sharma took over as the power minister, SNC had backed off from their commitments as per the screenplay. On April 21,2001 , Sharma has noted in the file According to the Para 2(1) of the Draft Agreement, as per the Project report it is the seen that SLI (SNC-Lavalin) has only agreed to make all efforts for obtaining the full assistance for the project. This is a deviation from the clause in the Para 3(a) of the MOU that the full amount will be provided for the project. In this context, steps should be taken to enter into an Agreement in the time frame of the MOU by making necessary amendments, according to the clause 3(a) MOU to ensure that SLI provides the full amount

So there is no point blaming anyone else who followed for not making a legally binding agreement.

About renewing the MOU, why should SNC Lavalin renew the MOU after they have obtained the full amount for the R & M Project ?

The LDF Government could get 12 crores from them. But UDF government couldn’t get a peny. Why?

  • The Cancer Center Project was to be over by 2001. That means the LDF ministry was supposed to get the whole 98 crores before 2001. But could get only 1/10th of the amount.

  • The KSEB secretary had warned that we should ensure that the release of the grant for the Cancer Centre is done pari-passu with the rehabilitation projects." But we never bothered.

  • Nor was there any legally binding agreement with which we could have forced them.

Why didn’t Antony send an appreciation letter as asked by them?

Such a letter was sent. But it is absurd asking why our CM didn’t beg after allowing them to get out without making them legally binding.

Did SNC Lavalin cheat us or did some of our leaders steal the money?

Let us ponder rather than being hasty. What is very clear and beyond doubt is that we were fooled.

Our leaders didn’t do this by mistake. This is clear as they were cautioned by officials but those officials were abused.

If our leader just acted so that others can rob us without getting his adequate share he is not just a thief but a fool also.

SNC had informed the state officially that they have 26 crores which they got from CIDA, ready to be distributed to the state by a letter. But it seems only 8 crores reached us. Even if the story is that CIDA backed off from their commitments,Where did this 18 crore go?

The deal is between KSEB and SNC Lavalin. How can individuals take money from here?

The deal was between KSEB and SNC Lavalin. How can KSEB have a cancer hospital? Lets leave this for now.

A Society named Malabar Cancer Center Society(MCCS) with Chief Minister as its chairman was constituted to run the hospital. An account for MCCS was initiated by paying Rs 300/- It was expected that money for the hospital will come to this account. But not another paisa came into that account ever.

Instead in the second meeting of the MCCS, a firm named Technicalia attends the meeting. And they start construction of the hospital. It was told that they were receiving money directly from SNC Lavalin.

How did Technicalia attend the MCCS meeting? Who invited them?

It is a mystery. This is a project under the power department of the state. There was a separate society formed exclusively for this project. This cancer center was a 103 crore project. We should have issued a tender to decide who will do this project. Instead we awarded it to a so-called firm in Chennai. Money is disbursed from Canada honoring an MOU between KSEB and SNC Lavalin. But when it reaches India, it is neither going to KSEB account nor to the MCCS account but to some other account (Technicalia’s? May be). Without asking for payment from anyone Technicalia constructs and when the loan component was repaid by KSEB , they just stop construction. HowZAT ?

Is it that we were denied of what was offered to us or did we actually incur more money?

We ended up spending much more.

  • The total renovation was not at all necessary. But we went ahead with it.

  • The enhancement which would have ensured additional power supply was not done.

  • Machines which were fully functional and which would have functioned effectively were unnecessarily replaced. At the most some replacement of parts were the only thing required. (As suggested by all experts).

  • These machines were replaced by faulty machines. (CAG report).

  • The reasonability of the prices were not ensured before the contract was signed.

  • BHEL was ready to do the projects at less than 100 crores .

  • Without the Grant element the rates were really exhorbitant.

  • And the grant component was eaten by somebody else.


Was there a project report submitted by SNC Lavalin to the QUBEC government?

Yes. But in this project report the total cost of the cancer center was shown as only approx 26 crores. This report was sent to the Kerala government by their high commissioner when Aryadan Mohammed wrote to him. Does this mean the hyped Cancer center project report was a ploy by Pinarayi and SNC to fool Kerala, ensure that the middlemen SNC gets the deal at a much higher rate? Was Technicaliya brought in so that the hospital project is delayed till they get their money and then desert it?


  • The agreement says that we will be governed by the rules of Ontario province. When Finance/Law departments questioned this they were silenced by Pinarayi.

  • It was agreed that KSEB will be registered as a company and says KSEB will be adapted and restructured “ to the new policy for generation, power production by private players”. The ministerial delegations minutes shows that a project called Kerala Enrgy Infrastructure Services Project (KEISP) was initiated for the same there.

രാഷ്ട്രീയമായി നേരിടുമ്പോള്‍ & ലാവലിന്‍ ഉത്തരം തേടുന്ന ചോദ്യം

Update: Original link at is not working. Thanks our blogger friend, we have updated the link.

രാഷ്ട്രീയമായി നേരിടുമ്പോള്‍

അടിയന്തരാവസ്ഥയിലേക്കു നയിച്ച അമിതാധികാര പ്രവണതകളുടെയും വ്യക്തിവാഴ്‌ചയുടെയും ഗ്രഹണബാധയാണ്‌ കേരളസമൂഹത്തിനു മുകളില്‍ ഇപ്പോള്‍. ''ഇന്ദിരയാണ്‌ ഇന്ത്യ'' എന്ന പഴയ മുദ്രാവാക്യം പുതിയ രൂപത്തില്‍ സി.പി.എം. പുറത്തെടുക്കുന്നു. അധികാരത്തിന്റെ പിന്‍ബലത്തിലുള്ള 'ജനപിന്തുണ'യുടെ സാഗര ഗര്‍ജനത്തിന്‌ ഒരുക്കം കൂട്ടുന്നു. സി.പി.എമ്മിന്റെ ഭാവപ്പകര്‍ച്ച കേരളസമൂഹത്തിന്‌ മുകളില്‍ ഭീകരതയുടെ കാര്‍മേഘ പടലങ്ങള്‍ക്ക്‌ ഇടമൊരുക്കുന്നു


അപ്പുക്കുട്ടന്‍ വള്ളിക്കുന്ന്‌

ലാവലിന്‍ ഉത്തരം തേടുന്ന ചോദ്യം കാന്‍സര്‍ ഹോസ്‌പിറ്റല്‍ പണിയുന്നത്‌ നല്ലകാര്യം തന്നെ. എന്നാല്‍ ഊര്‍ജനിലയങ്ങളുടെ ശേഷി ഉയര്‍ത്തുന്നതിനുള്ള കരാറില്‍ എന്തിന്‌ അതുള്‍പ്പെടുത്തണം? ഇതൊരു സര്‍ക്കാര്‍ പദ്ധതിയായിരുന്നോ? അതോ ഒരു സ്വകാര്യ ധര്‍മസ്ഥാപനത്തിന്റെ കീഴിലായിരുന്നോ? സംസ്ഥാന സര്‍ക്കാറിന്‌ താത്‌പര്യമുണ്ടായിരുന്നെങ്കില്‍ കനേഡിയന്‍
കമ്പനിയെ ചിത്രത്തിലേക്ക്‌ വലിച്ചിഴയ്‌ക്കാതെ സ്വന്തം നിലയ്‌ക്ക്‌ അര്‍ബുദ ചികിത്സാകേന്ദ്രം തുടങ്ങാമായിരുന്നില്ലേ? ഈ ഇടപാടില്‍ ഭൂമി ഏറ്റെടുക്കലോ കൈമാറ്റമോ നടന്നിട്ടുണ്ടോ?


ടി.വി.ആര്‍. ഷേണായ്‌

Tuesday, January 27, 2009

Some Reference materials

Some of the reference materials already available on web.

We will try to make more documents available to you.

Saturday, January 24, 2009

Introduction to SNC Lavalin Scandal

This is a forum to track SNC Lavalin Scandal in Kerala. To help you better understand the case, we have prepared a presenation. Download and read it. If you have any questions, comments or corrections inform us.

Based on your feedback we will review the presentation. As we were not involved in the scandal or part of CBI we do not know all the facts. Based on documents available with us and reports of other agencies we made this presentation to help you better understand the case. As more data becomes public we will be able to give you better picture of the issue.

Meanwhile enjoy reading. Waiting for your feedback.

Power Point Version