In Kerala folklore, there is a figure known as Vayilakunnelappan, who was born without the ability to open his mouth. This term is a colloquial expression in Kerala to describe someone who remains silent for far too long. It was on February 9, while introducing a new fuel cess, that Kerala Chief Minister Pinarayi Vijayan last held a press meeting or took any questions from the media. He is, currently, grappling with allegations of a significant corruption scandal, in which his family, too, is allegedly involved. Nevertheless, much like the folklore character, he continues to remain mum, while CPI(M) leaders are struggling to defend the allegations against the CM and his daughter.
The controversy started when Malayala Manorama reported on August 8 that Cochin Minerals and Rutile Limited (CMRL)—a controversial company working in the domain of converting ilmenite into synthetic rutile and ferric chloride—made a payment of Rs 1.72 crore under “bogus claims” to the CM’s daughter Veena Thaikandiyil. The report was based on the verdict of the New Delhi bench of the income tax interim settlement board on June 12.
An engineering graduate and former employee of Oracle, Veena's career path first raised eyebrows when she assumed the role of CEO at RP Techsoft International in Thiruvananthapuram in 2012. This IT venture was affiliated with the Middle East-based RP Group, owned by Malayali billionaire Ravi Pillai. In 2014, after resigning from RP Techsoft, she founded her one-person company, Exalogic.
This is not the first time Veena has come under the scanner. Last year, Swapna Suresh, a key accused in the Kerala gold smuggling case, alleged that Veena was the "mastermind" behind the Sprinklr scandal - the Kerala government was accused of breaching the privacy of 1.75 lakh people under quarantine by sharing their data with the American firm Sprinklr without their consent.
Veena's name was also linked by the opposition to allegations that the state government granted the consultancy for its e-mobility project to PricewaterhouseCoopers in a corrupt manner.
The current controversy is centred around the findings of the I-T interim settlement board, which revealed that Veena, wife of Kerala Tourism Minister Muhammad Riyas, received Rs 1.72 crore from CMRL between 2017 and 2020, despite not providing any services to CMRL. The events that led to this verdict began in January 2019 when the I-T department conducted a major raid to verify CMRL's documents. This raid was prompted by an examination of CMRL's tax payments between 2013-14 and 2019-2020, which uncovered numerous discrepancies and noted inflated expenses in the company's account books.
Interestingly, in November 2020, the company's MD S.N. Sasidharan Kartha and CMRL initiated a request for settlement. During the proceedings, a major revelation that emerged was that CMRL had made substantial cash payments, amounting to crores, to several politicians, including Chief Minister Pinarayi Vijayan, former chief minister and late Congress leader Oommen Chandy and Muslim League leader P.K. Kunhalikutty.
The company's general manager of finance explained the purpose of these payments, to the I-T officers as follows: “These payments were being made to functionaries/ members of various political parties, media houses, police etc. for smooth functioning of our business, especially in view of the fact that we obtain Ilmenite which is mined by PSUs as our raw material. This in-turn is having environmental impact, due to that we receive large number of threats to obstruct our business or to hinder smooth functioning of our day-to-day activities. In order to overcome these threats and to obtain co-operation we make number of payments to members/ functionaries of various political parties, state police, media houses so as to ensure smooth functioning of our day-to-day activities. These payments are made as demanded by them.”
Purushan Eloor, an environmental activist and research coordinator with Periyar Malineekarana Virudha Samithi (PMVS), alleges that CMRL is one of the major polluters of the Periyar River, which is the lifeline of central Kerala. He points out a contradiction: "This same firm has won the Excellence Award from the Kerala State Pollution Control Board consecutively for 11 years. This raises questions about the influence that the owners of this company exert over politicians, the pollution control board, trade unions, and the media."
Eloor, who has been protesting against the pollution of Periyar since 1996, further notes that those who oppose the company's "smooth operation" often face legal cases or are labelled as 'Maoists'. He recalls an incident from 2011 when the Pollution Control Board (PCB) released a study report on the discolouration of the Periyar River. The study, led by environmental engineer D. Chithra Kumari, the PCB surveillance head in Eloor, found that the discharge of ferrous chloride into the Periyar River, originating from CMRL and other firms in the industrial area, was responsible for the river's red colouration. Eloor obtained this study report through the Right To Information Act.
In 2012, during a meeting with trade unions, PCB officials, and environmental activists, Eloor presented this document. However, in 2017, CMRL filed a complaint against him, accusing him of forging the document. Non-bailable charges were brought against him, and it took two months to secure anticipatory bail. “Fortunately, I had preserved the same document, along with its covering letter from the Pollution Control Board's district and state offices. This crucial evidence prevented my incarceration in the forgery case,” he says. THE WEEK contacted the senior leadership of CMRL for a comment, but is yet to get a response.
During the search at CMRL's corporate office, I-T officers recovered a service agreement dated March 2, 2017, between CMRL and Veena's company, Exalogic Solutions Private Limited. According to the agreement, Veena's one-person company was tasked with developing, maintaining, and managing IT services for CMRL's corporate office. The agreement stipulated that Exalogic was entitled to a monthly payment of Rs 3 lakh.
Interestingly, during the I-T team's search, it became evident that the only software in use at CMRL was Outlook, MS Office, Tally, and Power Builder, all of which were managed by the company's internal IT team. Furthermore, investigators discovered another significant letter dated December 2016, which indicated that CMRL had engaged Veena as its "marketing and IT consultant on a retainership basis" starting from January 1, 2017. The letter bore Veena's signature, signifying her acceptance of the arrangement.
However, during the raid, when the company's top officials, including managing director Kartha, were questioned about the services provided by Veena, they said that they were not aware of any IT services being delivered by Veena to the company. Later, they filed a retraction affidavit in an attempt to clarify that Veena had indeed provided genuine services, and legitimate payments had been made through banking channels after deducting TDS (tax deducted at source). However, the company officials' retraction was not accepted, as they could not prove that their earlier statements were untrue or had been given under coercion.
Incidentally, the quasi-judicial body concluded that CMRL had indeed made payments through banking channels to "individuals associated with a prominent person, claiming it as a deductible expense and asserting compensation for a service that had not been rendered or received".
Social observer Joseph C. Mathew, who has over 25 years of experience in IT, expresses suspicion regarding CMRL's claim that Veena's consultancy was on retainership. "If you are a salaried employee, you are essentially on retainership. Conversely, when you are a consultant, you are compensated solely for the services you provide. You receive payment for your services and not a fixed salary. What, then, does a consultant on retainership even mean? Pinarayi Vijayan claims to have abolished the system of 'nokkukkoli' (gawking wages) for headload workers. What Veena received appears to be 'nokkukooli.'"
Joseph emphasises that attention should be directed toward three crucial aspects in the verdict: "Pinarayi Vijayan received cash payments; Veena received Rs 1.15 crore as a consultant; her one-person company, Exalogic, received Rs 57 lakh. All these payments seem to be intended for a single individual, Pinarayi Vijayan. If Veena Vijayan or Exalogic received money without providing any services, what constitutes their capital? Their capital seems to be the political power of Pinarayi Vijayan. Importantly, these facts are not mere allegations; they are part of the interim settlement order. Such an order has been issued, yet the chief minister has not responded. Even if he believes that right-wing media is targeting him, he should come forward and address these concerns."
Although the CM did not provide an answer, the CPI(M) state secretariat defended the transactions between Veena and CMRL on August 10. Ignoring the findings, the party's state leadership declared the contract between CMRL and Exalogic as "transparent" and labelled it a conspiracy in light of the assembly polls declared in the Puthupally constituent assembly.
"The children of political activists have the same rights as all other citizens to pursue any legitimate occupation. Based on this premise, Veena established a consulting company. All of its operations are conducted transparently. The company that provided the funds has affirmed that no wrongdoing occurred in this matter. It is also evident that the chief minister is not connected to this.”
Black sand mining, which leads to shoreline changes, biodiversity loss, disappearance of villages and forced migration, has been a serious issue in the coastal areas of Kollam and Alappuzha districts in Kerala for many decades, according to Jackson Pollayil, the state president of the Kerala Swathanthra Malsya Thozhilali Federation. Public-sector undertakings such as the Kerala Minerals and Metals Limited and Indian Rare Earths Limited are major companies engaged in mining along the Kerala coasts.
The official stance of the Pinarayi Vijayan government is that no private companies will be allowed to conduct black sand mining, although there are allegations that during the first Pinarayi Vijayan government, there were efforts to consider direct mining requests from Kerala Rare Earths and Minerals Limited, a company promoted by CMRL.
However, activists like Pollayil point out that although the mining is carried out by PSUs, it is done on behalf of private players like CMRL. "Large volumes of sand have been mined from locations such as Thottappally Harbour and Valiyeezhikkal Harbour. This mining activity contributes to coastal erosion and is carried out to benefit 'sand feeding' companies. At Thottapally, black sand companies are experimenting with a new technique that involves creating large craters in the estuary using heavy dredgers and excavators and then transferring the sand from the nearby shore to the estuary. Over the past eight years, 456 families have lost their homes and land in areas such as Arattupuzha, Thrikunnapuzha, Purakkad, Ambalapuzha, and Punnapra panchayats. These losses should be compensated by the sand-feeding companies, including CMRL. Approximately 4,500 families are currently at risk of eviction."
Interestingly, in August 2020, the late Congress leader P.T. Thomas had raised allegations that mining firm CMRL had provided approximately Rs 50 lakh to Veena's company. However, the response from the Congress leadership and the UDF was tepid then. Despite the current report on the 'bogus payment' received by the CM's daughter emerging during an ongoing assembly session, the UDF refrained from raising it as an adjournment motion on the floor, citing technicalities.
Nevertheless, during the discussion of the Kerala Government Land Assignment (Amendment) Bill, 2023, Congress MLA Mathew Kuzhalnadan attempted to address the issue. However, the speaker and the treasury bench thwarted his efforts. Last year, during the assembly's deliberation on the gold smuggling scandal, Kuzhalnadan had contended that Veena's close ties to a PwC director had granted the global brand undue influence over the top leadership of the LDF government. Interestingly, the CM had vehemently denounced Kuzhalnadan's statements as a "blatant falsehood" in the assembly.
Since he attempted to present the current scandal in the assembly, Kuzhalnadan has held a series of press conferences, challenging the CPI(M) and Pinarayi Vijayan to initiate a probe into the corruption allegations levelled against his daughter, Veena, and to release her account and income tax details. He has also questioned the CPI(M)'s stance, which asserts that the money Veena received was in exchange for services rendered. He dared the party to provide evidence of IGST (the reasoning being that, even though her company is based in Bengaluru, a portion of the GST she pays for services delivered to a Kerala-based company will be credited to Kerala).
The Congress leader has also submitted a complaint to Finance Minister K. Balagopal, asserting that Veena has not fulfilled her tax obligations regarding the Rs 1.72 crore she received from CMRL.
Interestingly, CPI(M) Central Committee member and former finance minister Thomas Issac interpreted this as an admission by the Congress MLA that the money received by Veena was, in fact, a service charge. "When he asserts that GST has not been charged, he is essentially acknowledging that it was indeed a service charge. If there is tax evasion or if there is an additional amount involved, let the government investigate the matter. If Kuzhalnadan claims there is more to it, he should provide evidence," he told THE WEEK.
However, Kuzhalnadan told THE WEEK that he raised the issue of GST knowing that Veena did not pay IGST. "She has not paid IGST for this specific amount of Rs 1.72 crore because it is evident that the amount was not received in exchange for any services rendered. The reason I raised this issue is that the CPI(M) state secretary has taken up the defence for the CM's daughter, asserting that the amount received was payment for some service. However, there were no services provided, and no IGST was paid. This indicates that it was a bribe, illegal money received as a kickback by the CM's daughter."
Kuzhalnadan alleges that Veena's company, which is currently dormant with closed GST accounts, was used as a shell company. He asserts that she received funds similar to those she received from CMRL from multiple firms. He has also alleged that the CM’s daughter received foreign money, but has not shown anything under the export service section while filing the IT returns. “A plain reading of auditing documents and IT returns of Veena’s accounts show that foreign money was received by the company without providing any service,” he says.
Meanwhile, the CPI(M) has levelled serious allegations against Kuzhalnadan. The Congress leader is now facing investigations by multiple state government agencies over allegations of amassing illegal wealth, tax evasion, and engaging in illegal landfilling. CPI(M) leaders claim that Kuzhalnadan is continuing his attacks against the CM and his daughter to divert attention from the allegations against him. However, Kuzhalnadan told THE WEEK that he expected such a backlash. "Whenever we challenge those at the top, like when we confront the CM, we should be prepared to face all such consequences. This was anticipated, but I will fight it out, no problem."
Joseph, however, points out that the principal opposition in Kerala including Congress has failed to mount a significant protest against the corruption allegations. "This silence is deafening." He adds that in Kerala, a nexus exists between politicians from both ruling and opposition parties, along with traders and a strong presence of interests from the Middle East. "They ensure that only surface-level attacks are tolerated against this system. If anyone dares to go against it, they will be isolated."
The Kerala CPI(M) is currently navigating a phase in which its leadership is facing numerous allegations simultaneously. In recent days, the Enforcement Directorate (ED) conducted a 22-hour raid at the residence of former minister and CPI(M) MLA A.C. Moideen in connection with his alleged links to the Rs 125.83 crore scam at Thrissur's Karuvannur Cooperative Bank. The party's leadership is handling the challenging task of responding to all these allegations while also protecting the CM.
When THE WEEK contacted the Chief Minister's Office (CMO), the response was that the CM may address all these issues during an election campaign in Puthupally on August 24. Issac also informed THE WEEK that the chief minister would respond at the "appropriate time".
