Lavalin case: CBI to prosecute Vijayan

Thiruvananthapuram, Jun 8: Central Bureau of Investigation (CBI) has got the permission from the the Kerala governor R S Gavai to prosecute senior Communist Party of India (Marxist) leader Pinarayi Vijayan in Lavalin case.

Sources said to media that R S Gavai gave his consent after a request by the CBI. Vijayan, secretary of the CPI(M) is accused of favouring SNC lavalin in granting contracts to renovate two hydro power projects when he was the state's power minister in 1977.


The move also marks the bitter power struggle in the state of CPI(M) between Vijayan and chief minister V S Achuthanandan.

The CBI Report

In the progress report filed before the CBI Special court by the CBI Chennai unit DySP, V Ashok Kumar, it has been stated that Pinarayi Vijayan, the former Electricity Minister should be arraigned as the ninth accused.

Claus Trendl, Senior Vice President of the Canadian firm SNC-Lavalin, has been arraigned as the 11th accused and A. Francis, former Joint Secretary (power) as the tenth accused.

During the course of investigation, Vijayan's involvement came to light apart from the other accused, CBI said in its report. Vijayan, while serving as Electricity Minister between May 1996 and October 1998, colluded with K. Mohanachandran, Principal Secretary (Power) and joined criminal conspiracy which was already hatched in 1995 by R. Sivadasan, former KSEB chairman and others in the matter of awarding supply contracts of the projects to Lavalin, the CBI stated. Vijayan had led a high level delegation to Canada in October 1996 and held discussions with SNC-Lavalin and Export Development Corporation International Development agency regarding the contract and took a decision in awarding the supply contracts to Lavalin at a fixed rate basis. The main consideration in the award of the contract, which was signed by KSEB on February 10, 1997 without Government approval, was the grant offered for establishment of Malabar Cancer Centre (MCC) at Thalassery in Kannur district.

The E. Balanandan committee, appointed by the Kerala government, in its report had opined that the complete replacement of the machinery need not be carried out for the hydel projects and essential parts alone need to be replaced for which the estimated cost will be around Rs 100.5 crores. This recommendation was overlooked and the supply contract was signed just a week after Vijayan received the report. CBI said Vijayan along with the then Chief Minister, the late E. K. Nayanar and the late Dr. V. Rajagopal, former KSEB chairman, again visited Canada during June 1997 where the grant amount to establish the MCC was decided at Rs 100 crores.

The CBI stated that Vijayan along with the other accused had, 'fraudulently with dishonest intention' of showing undue favour to SNC Lavalin, entered into only a 'non binding' memorandum of understanding on April 25, 1998 for MCC instead of a legally valid memorandum of agreement which facilitated SNC-Lavalin to back out from the commitment later, thereby 'cheating the government'. K. Mohanachandran and A. Francis signed the MoU and no Government order was issued authorizing K. Mohanachandran to sign the same, but there was concurrence of Vijayan.

Lavalin, taking advantage of the non binding agreement, backed out of the commitment after spending only about Rs 12 crore through its consultants, thus not financing MCC to the tune of Rs 86.25 crore.

As part of the criminal conspiracy, Vijayan, K. Mohanachandran and A. Francis and others placed a crucial note for approval before the Countil of Ministers on March 3, 1998, after suppressing various facts, including the fact that MoU route was dispensed with the Union Government, full report of the National Hydroelectric Power Corporation was not highlighted and concurrence of Central Electricity Authority, and obtained cabinet approval. Vijayan also had close contacts with SNC-Lavalin officials and by abusing his official position had exerted 'high pressure' on the staff of KSEB and thereby favoured Lavalin in their official dealings with KSEB, CBI said. The investigations revealed that the supply contract for renovation and modernisation of the Panniyar, Shengulam and Pallivasal hydel projects was given to SNC Lavalin at an exorbitant rate and the per MW cost for the same was the highest. This caused a loss to the Government of Kerala with corresponding wrongful gain to Lavalin.


In 2009 Indian Union Lokshabha elections, In kerala the candidates who were highlighted by the LDF led government sufferered a huge loss... the UDF led opposition gained a 16 to 4 seats victory over LDF... The one of the cause of victory was the arrogance that shown by LDF government in protecting Pinaray vijayan..

CBI requested an order for prosecuting Vijayan and Government took a decision not to allow the prosecution later this was taken before the governor of kerala. on June 6,2009 the governor ordered CBI to start prosecution of Pinaray vijayan.

Some party members had started the demand for resignation of Pinaray vijayan from the post of CPI(M) Party secretary and to face the charges against him.

The history

The Kerala State Electricity Board (KSEB) signed a memorandum of understanding (MoU) with SNC-Lavalin in August 1995. This time G. Karthikeyan of the Congress Party was the Minister for Electricity. 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). The Board did so, ignoring the Central Electricity Authority's (CEA) recommendation that immediate replacement of the generating units at the Pallivasal power station was not called for as the plant was in fairly good condition. The Board undertook a feasibility study on the proposal only in September 1995, by a retired Chief Engineer of the KSEB, who later became a consultant to Lavalin.

Based on the consultant's report and further discussions, the Board signed contracts with SNC-Lavalin to provide technical services for management, engineering, procurement and construction supervision in February 1996, to ensure completion of the projects within three years. This time also G. Karthikeyan of the Congress Party was the Minister for Electricity. The 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) in February 1997. During this period Pinarai Vijayan was the Minister for Electricity.

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.

On 16 January 2007, Kerala High Court[6] ordered a CBI enquiry into the scandal.

On February 19, 2008, the CBI informed High court of Kerala that the investigation was progressing and said that former Electricity Ministers Pinarayi Vijayan and G. Karthikeyan would be examined at the appropriate time. [7]

On 21 January 2009, the CBI filed a progress report on the investigation in the Kerala High Court. Pinarayi Vijayan had been named as the 9th accused in the case.

What is this lavalin case?

Thanks keralatips

Consider that you are entering into a business deal with a company. Now the company says that it needs 400crores for the business deal. Then it says that out of those 400 crores it will give back 100 crores as a grant to build a cancer centre!

Yes, you read it right! Does it make any sense? What is cancer has to do with hydro electric plant renovation? These questions were asked by top IAS officers at the time, but they were labeled as insane!

There is one thing that unites all parties in Kerala - Corruption…

Sometimes I wonder what would be the state of Kerala or India if there were no courts!

CPI: Lavalin case has to be fought legally

A Day after the CBI filed the chargesheet against CPI(M) state secretary Pinarayi Vijayan in the SNC-Lavalin case, the CPI and RSP, both constituents of the Left Democratic Front in Kerala, said the case should be fought legally. 



The CPI’s decision would come as a relief for Chief Minister V S Achuthanandan, who has been battling alone against Vijayan. The move to jettison Vijayan is a departure from the earlier stand of the CPI, which had tacitly supported the CPI(M) in endorsing the advocate-general’s report against prosecuting the state secretary. 

During the state executive meeting held last week, the party’s central leadership had come down on state leaders for their failure to uphold the party’s professed stand against corruption. CPI state secretary Veliyam Bhargavan was then forced to comment that the Lavalin case could not be construed as politically motivated.

CPI sources said this shift in its stance should be seen as an attempt to bring the party out of the CPI(M)’s shadow. The CPI state leadership has faced severe criticism for toeing the line of the faction of the CPI(M) led by Vijayan. 



During Friday’s party secretariat meeting, two assistant secretaries wanted to take a stand in favour of Vijayan in the Lavalin issue. However, the trade union lobby, led by a senior AITUC functionary, was vehemently opposed to the idea, as it would be suicidal for the party already facing an identity crisis in the state. 


To do a balancing act, the official release said the Governor had shown undue haste in giving the sanction for prosecution. It was unbecoming of the Governor, said the release, to bypass the Cabinet and give the sanction report to the CBI.

CBI to grill Pinarayi in Lavalin case

Kerala’s biggest financial scam, the Rs 98 crore SNC Lavalin case, took a major turn on Monday with the CBI telling the high court that it has decided to interrogate state CPI(M) secretary Pinarayi Vijayan, and former Congress Power Minister G Karthikeyan. 



The CBI submission added that it was going to broadbase its investigations into the 12-year-old scandal to Canada, where SNC Lavalin is located. The Congess-led Opposition in the state has been insisting that Vijayan, now beginning his third consecutive term as the state CPI(M) chief after vanquishing the camp of factional rival and Chief Minister VS Achuthanandan last week, was the prime mover behind the scam in his role as the Power Minister in the E K Nayanar Government. 


The scandal had its genesis in a 1996 agreement that the Congress-led UDF Government got the Kerala State Electricity Board (KSEB) to sign with a Canadian power consulting company, SNC Lavalin, for replacing and modernising the obsolete generators in three hydroelectric projects at Pallivasal, Sengulam and Panniar.

Lavalin: Governor seeks more details on AG's opinion

Thiruvananthapuram (PTI): Kerala Governor R S Gavai has sought further details from the state government on the legal opinion of state Advocate General C P Sudhakara Prasad that there was no firm ground to grant permission to CBI to prosecute CPI(M) state secretary Pinarayi Vijayan in the SNC-Lavalin corruption case. 

The legal opinion from the AG and the minutes of the cabinet decision in the case forwarded by the state government and the related documents and reports received from CBI were being examined in detail, a Raj Bhavan press release said here. 

The clarifications sought for are awaited from the government, it said, adding that an appropriate decision would be taken as stipulated in the Constitutional provisions after considering all aspects. 

The statement was issued in the wake of the "conflicting news and views appearing in the media" regarding the matter of granting sanction to prosecute Mr. Vijayan in the case, it said. 

The SNC-Lavalin case relates to alleged corruption in awarding of contract for renovation of three hydro power stations in 1997 to Canadian firm SNC Lavalin, when Mr. Vijayan was state Power Minister. 

Four months back, CBI had written to Governor, seeking permission to prosecute Mr. Vijayan, who in turn, referred the matter to the state government. 

Considering the political ramifications, the government had referred the matter to the Advocate General.