Irregularities Galore, PPP Firm INKEL Removed From Rs 233 Crore Beach Project
Muzhappilangad beach where the project was plannedPhoto credit: Wikimedia Commons

Irregularities Galore, PPP Firm INKEL Removed From Rs 233 Crore Beach Project

A GO accessed exclusively by The Lede shows the government itself has found irregularities & lapses in the project in the CM’s constituency

INKEL, a private-public partnership limited company in Kerala, has been removed from implementing Kerala Infrastructure Investment Fund Board’s (KIIFB) Rs 233 crore worth beach project in Kerala chief minister Pinarayi Vijayan’s constituency, a government order accessed by The Lede reveals.

The GO issued by the Tourism Department reveals that the Inspection Authority (Technical) of KIFFB has conducted a detailed inquiry into the execution of the projects by INKEL and found many irregularities.

The project was aimed at the comprehensive development of Muzhappilangad and Dharmadam Beach in Kannur district at an estimated cost of Rs 233.71 crore.

INKEL was set up by the Kerala government with non-resident and resident investors and the general public, to create a platform for the development of public infrastructure.

NRI Directors

While Kerala Industries Minister EP Jayarajan holds the Chairmanship of INKEL, Dr K Ellangovan IAS Principal Secretary (Industries) is a Nominee Director.

Meanwhile, Bahrain-based Varghese Kurian managing director of ALNAMAL Group, Qatar-based CV Rappai, Director & GM, Video Home and Qatar-based Mohamed Althaf Regional Director of Lulu Group are the other directors. Kochi-based MM Abdul Basheer, Managing Director of IGCL, is another director.

While the Kerala government holds only 22.78% of the company shares, directors and relatives of directors hold 43.35%. And foreign holdings are 13.01%.

After removing INKEL, the Tourism Director has requested to change the SPV (Special Purpose Vehicle) of the above project and suggested KIIDC (Kerala Irrigation Infrastructure Development Corporation) instead of INKEL.

KIIFB Looting People?

Meanwhile, PG Sunil Kumar, a financial analyst, said that the government may call it lapses and irregularities, but as far as the layman is concerned, it is corruption.

“If a project cannot be carried out properly without lapses and irregularities even in the chief minister’s constituency, then are they going to ensure quality in other places? KIIFB is to loot money. Special Purpose Vehicles and contractors are minting money from such projects. We should not forget that this money is raised as loans and bonds, for which the state is a guarantor. When we say state, it is not MLAs and MPS, it is the common man. We are going to pay the price for this,” Sunil Kumar said.

Evading CAG

He also added that this is why the government is evading a CAG (Comptroller Auditor General) audit.

“They know that a CAG audit will open a pandora's box. So they have made amendments cunningly to avoid the CAG,” he added.

While Kerala finance minister Thomas Isaac repeatedly says that a CAG audit is allowed by Section 14(1), opposition and financial analysts expressed their surprise over why an audit under Section 20 is being denied.

Denying a comprehensive audit into KIIFB, the Kerala finance minister gave a written reply in the Assembly that KIIFB formed under the 1999 Act is a statutory corporate body.

A statutory corporation is a corporation set up by the state, which might be ordinary companies/corporations owned by a government with or without other shareholders, or they might be a body without shareholders that is controlled by the national or sub-national government to the extent provided for in the creating legislation.

Life Insurance Corporation, Food Corporation of India and Airport Authority of India are a few examples of statutory corporations in India.

According to Kerala finance minister, the CAG is free to audit all receipts and expenditures of KIIFB, including those related to Masala Bond, “as the authority is empowered to do so under Section 14(1) of the CAG Act”.

“The CAG has the power to audit all the accounts of KIIFB under Section 14(1), while Section 14(2) empowers the authority to approach the government if it finds scope for auditing beyond Section 14(1),” the minister said.

The CAG had asked the government permission to audit KIIFB under Section 20(2) of the Comptroller and Auditor General’s (duties powers and conditions of service) Act, 1971, as its auditing scope is limited under the Section 14 of the Act.

Through CAG’s Section 14, an audit cannot be done on funds raised from the market. KIIFB is raising funds from the market other than government grants.

INKEL’s Lapses In 2019

In November 2019, the KIIFB had issued a stop memo to the construction of the Cochin Cancer Research Centre.

INKEL was the SPV set up to carry out the project. There too, the KIIFB found serious lapses on the part of INKEL.

KIIFB chief executive officer KM Abraham had said then that the inspection found serious irregularities in the execution of the concreting work. “Instead of the stipulated materials, the scaffolding was done using bamboo poles. The ground was not properly strengthened before the scaffolding was erected,” he said. Besides the anomalies in formwork, around five other faults were detected in the construction.

“The rectification list will be prepared after a detailed examination. It will be prepared at the earliest considering the importance of the institution. But there will not be a compromise on the safety aspects,” he had said.

Two months ago, KIIFB had asked INKEL to remove the contractor owing to quality issues and delay in work. During the routine project intervention meeting, KIIFB asked INKEL to re-tender the project.

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