Central Bureau of Investigation (CBI) special court judge R. Reghu on Friday asked the probe agency whether the Kerala government ever had ‘a clear commitment’ from SNC-Lavalin that it would on its own ‘provide funds’ for setting up a cancer hospital in north Kerala in reciprocation for the fixed rate contract awarded to it in 1997 for renovating and modernising three hydroelectric projects in the State.

The judge was hearing arguments on pleas filed by the accused in what has come to be known as the SNC-Lavalin corruption case (notably the prayer of former Electricity Minister and CPI(M) State secretary Pinarayi Vijayan) that they be absolved of the charges of conspiracy and corruption slapped on them by the CBI, which investigated the deal.

The judge asked what interest the State had served when it awarded the contract to Lavalin in 1997-98 to renovate the Pallivasal, Sengulam, and Panniyar (PSP) projects without putting out the work to global tender.

Nature of grant

If public interest was the reason for the State to award the contract to Lavalin (on the premise that it would grant Rs.89 crore for the proposed cancer hospital at Thalassery in Kannur), then was it the CBI’s case that the Canadian firm had deliberately gone back on its word knowing from the very outset that the agreement was not legally enforceable.

Would the State have received the grant had it struck a legally enforceable and binding Memorandum of Agreement (MoA) with SNC-Lavalin instead of a non-binding Memorandum of Understanding (MoU)?

The judge said it seemed not to be the case since SNC-Lavalin, according to the ‘facts presented so far’ by the CBI, had promised only to ‘arrange’ the grant (over its own contribution of Rs.12.5 crore, which was purportedly routed to the Malabar Cancer Centre (MCC) through a private agency) from certain other Canadian entities.

Legally binding?

However, these entities were not a signatory to the MoU. Hence, even if the MoU had been converted into a legally binding MoA, still the chances of legally enforcing the contract to ensure payment of the promised grant to the MCC would have been impossible in the absence of a tripartite international agreement involving the State of Kerala, SNC-Lavalin, and the Canadian entities, which SNC-Lavalin said would pay the rest of the grant at its instance.

Now, was it the CBI’s case that avoidance of such a tripartite agreement was part of the alleged conspiracy to defraud the State and cause undue pecuniary advantage to the Canadian firm in the Rs.376-crore contract, he asked. If so, why was not the matter mentioned in the CBI’s charge sheet?

“If you enter into an agreement with another party to catch the moon, something next to impossibility, could you charge the party involved for going back on the agreement,” the judge asked. Did the State seek legal opinion or not on whether or not the agreement, if there ever was one with SNC-Lavalin for the grant, would be legally enforceable?

He observed that the State’s agreement with SNC-Lavalin on the ground that it would arrange a grant for the MCC from a third party seemed, at the very outset, next to impossible without the third party being a signatory to the contract. Did SNC-Lavalin back out of its promise knowing that its agreement with Kerala could not be legally enforceable?

Mr. Reghu asked the CBI whether the failure, if any, to enter into a tripartite agreement was an ‘administrative folly’ or part of the conspiracy itself. He questioned the CBI’s basic premise that if the accused had struck a binding agreement with SNC-Lavalin, the grant for the MCC could have been secured. “You cannot arrive at such a premise based solely on the borrowed wisdom of Electricity Ministers who succeeded the seventh accused in the case,” he said. The judge asked whether the alleged conspiracy in the case was hatched in 1996 when the State government decided to award the consultancy contract for augmenting power production in the PSP projects to SNC-Lavalin.

Did SNC-Lavalin promise any grant for community development programmes at the juncture? (G. Karthikeyan, who the CBI absolved in the case, was Electricity Minister then.) The court will hear the case again on November 5.

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