Odious Debts Online
January 17, 2007

The Kerala High Court in south-western India has directed the country’s top investigation agency to look into a corruption scandal concerning a years’ old government electricity contract awarded to a Canadian construction firm.

The case involves alleged kickbacks paid to politicians and government officials in exchange for a hydroelectric power project contract.

SNC Lavalin was awarded a contract to modernize three of the Kerala state’s hydroelectric projects after promising in return to pony up a grant of more than Rs 98 crore for a cancer hospital in north Kerala.

Only Rs 9 crore of the money has been accounted for since the deal was inked in 1996 under then power minister, Pinnarayi Vijayan – currently state secretary of the ruling Communist Party of India-Marxist (CPI-M).

According to the Comptroller and Auditor General of India (CAG), which uncovered serious deviations in the power contract during its investigation [PDF] early last year, the money spent on SNC Lavalin had gone to waste because the deal had failed to increase power generation by any extent.

A Division Bench of the Kerala High Court this week asked India’s Central Bureau of Investigation (CBI) to investigate the case after dismissing review petitions filed by the state government, saying that the CBI probe should not be prejudiced by findings of an earlier probe by the State Vigilance Department (Kerala’s most prominent anti-corruption agency).

According to an Indian Express [PDF] report, during the hearing, the court asked the Kerala government to spell out why it was “shirking” from a CBI inquiry into the case (the state’s Left government had argued that an investigation by its Vigilance Department was sufficient, although an earlier Congress-led government had asked for a CBI probe).

After the High Court directed the CBI probe to go ahead, Pinarayi Vijayan announced that his party accepted the court’s decision and would not be launching an appeal to the Supreme Court, claiming it wasn’t scared by the prospect of a CBI investigation.

Pinarayi’s political rival, V.S. Achuthanandan, the chief minister of Kerala state, who had called on the government to blacklist SNC Lavalin after the scandal broke, said he still stood by his call for action, the Indian Express reports.

Canadian foreign aid watchdog, Probe International, claims Canadian Crown agencies that help fund Canadian business projects abroad – in particular, the Canadian International Development Agency (CIDA) and Export Development Canada (EDC) – should assist Indian authorities with the case.

“These agencies may hold key information,” said Probe International’s Patricia Adams. “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 corrruption. Now, Canada has a new government that claims it is committed to honest dealings. I hope the current government will take a different approach and I would also urge the Canadian Auditor General to investigate, as Canadian tax dollars are involved.”

Related articles by Odious Debts Online:
India’s Comptroller and Auditor General finds major lapses in government electricity deal with Canadian firm, SNC Lavalin