Congress leader Mathew Kuzhalnadan raised a significant accusation on Tuesday, alleging that Kerala Chief Minister Pinarayi Vijayan had made some major interventions to help the controversial firm, Cochin Minerals and Rutile Limited, and that the Rs 1.72 crore received by the chief minister's daughter, Veena Vijayan and her company Exalogic, under purportedly "bogus claims", constituted a bribe to facilitate this corruption.
Kuzhalnadan attempted to raise these allegations on the assembly floor on Monday. However, speaker A.N. Shamseer ruled that the MLA would not be allowed to raise the allegation without “proper documents” to support it. He also cut off the microphone of the MLA three minutes before his allocated time, to prevent him from speaking.
On Tuesday, Kuzhalnadan raised the allegation that the CM took special interest to help CMRL retain four leases—and thereby giving permission for mining beaches for black sand—in spite of the successive governments’ declared policy that no private parties will be allowed to do black sand mining in the state. Kuzhalnadan also said that Speaker Shamseer was shielding the chief minister by preventing him from raising the issue in the assembly.
Root of the controversy
The root of this controversy was ignited when a newspaper reported on August 8 that the CMRL 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, last year. The board had found that Veena received the sum of Rs1.72 crore from CMRL during a period of three years between 2017 and 2020, without actually providing any services to the company.
All this had started when in January 2019 a major raid was held by the I-T department to verify the documents of the CMRL. The I-T raid, which was conducted on the basis of the tax paid by CMRL between 2013-14 and 2019-2020, unearthed many discrepancies and observed inflated expenses on the account books. Incidentally, in November 2020, the company MD Sasidharan Kartha and the CMRL raised a request for settlement.
During the proceedings, one major revelation that came in front of the interim settlement board was that CMRL made huge cash payments running to crores to a number of politicians.
During the raid, the company’s general manager of finance explained the purpose of these payments to I-T officers, saying: “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.”
During the search in the corporate office of the CMRL, the I-T officers had recovered a service agreement dated March 2, 2017, between the CMRL and Veena’s company, Exalogic Solutions Private Limited. According to that, Veena’s single person company was supposed to provide services in developing, maintaining and managing IT services for CMRL corporate office. The agreement said that Exalogic was entitled to receive a monthly pay of Rs 3 lakh. Interestingly, when the I-T team conducted the search, they saw that the only software being used by the CMRL were Outlook, MS Office, Tally and Power Builder, and these were maintained by the company’s internal IT team. The investigators also found another crucial letter from December 2016, which says that CMRL is pleased to engage Veena as its “marketing and IT consultant on a retainership basis” from January 1, 2017. The letter was signed by Veena—as a mark of her acceptance.
However, during their questioning, the company’s top officials, including managing director S.N. Sasidharan Kartha, said they were not aware of any form of IT services being delivered by Veena to the company. They later filed a retraction affidavit and tried to clarify that Veena delivered genuine services and bona fide payments were made through banking channels after deducting TDS (tax deducted at source). However, their retraction was not accepted as they could not prove that the earlier recorded statements were untrue or were given under coercion. Incidentally, the quasi-judicial body gave the verdict that CMRL, in fact, had made payments through banking channels to “persons connected with a prominent person and thereby claiming it as a deductible expense and by claiming to compensate a service which has not been rendered or received.”
Veena’s firm Exalogic and the CMRL are now facing a Serious Fraud Investigation Office investigation.
Kuzhalnadan’s arguments
In 2004, the CMRL obtained four leases for mining the black sand. “Today, if somebody values this, the value depth of these is above Rs 1,000 crore,” said Kuzhalnadan. “Since the then government felt that these leases were against public interest, it stayed any further action on them after 10 days. Ever since then, the CMRL has been trying to obtain back this lease.”
But the successive governments did not allow this. During the reign of the LDF government led by V.S. Achuthanandan, it was decided that no private players would be allowed to do black sand mining.
The CMRL then went to the Central Mines Tribunal, and got a favourable verdict. But the government did not take any favourable decision. So, the company went for a legal fight which finally ended up in the Supreme Court.
A three-member bench of the apex court considered the case and settled the matter in favour of the CMRL.
“However, the SC gave a chance to the state government,” said Kuzhalnadan. “The verdict observed that the lease granted to the CMRL is legal because the government did not notify that land [for the public sector] that had been given to CMRL under lease. But the court observed: ’In other words, the dismissal of this appeals shall not prevent the state from invoking its rights under section 17.A.2 of the [Mines and Minerals Development and Regulation] Act by issuing notification in respect of mineral deposit in question.’”
This order was passed on April 8, 2016. According to Kuzhalnadan, the judgement gave a legal go-ahead to notify and take back the land. The Pinarayi Vijayan government came to power on May 25, 2016.
“CMRL’s biggest need was to get this lease functional. They had given multiple petitions to the governments. They presented a petition to Pinarayi government also,” said Kuzhalnadan. “The moment this land is notified by the government , CMRL’s interest in that land will end. However, the state government proceeded in a different direction.”
Kuzhalnadan cited two versions of Kerala Industrial Policy 2018 to prove his point. “The para 6.6 of English version of the industrial policy released by the state government is as below: ‘The mining of rare earths will be restricted to the public sector. Use of mineral wealth in the Chavara Thottappally belt shall be taken up in a planned and holistic manner on the basis of a masterplan to produce value added products without endangering the livelihood of the coastal communities and environment. A large modern plant will be set up to produce Titanium metal without confirming Titanium pigment alone.’ In the Malayalam version, however, there are some additions.”
Kuzhalnadan noted that the Malayalam version has an additional sentence after the first sentence: ‘The mining of rare earths will be restricted to the public sector. However, the Supreme Court order in this regard will be implemented.’
“If the first sentence is followed, the only option in front of the government is to notify and take back the land. But this additional sentence was introduced in order to keep a policy space carved for the operations of the CMRL. This sentence was for CMRL,” says Kuzhalnadan.
The Congress leader noted that as roads were getting clear for the CMRL, a move came from the Centre. The union ministry of mines issued an order for premature termination of all permissions and leases held by private companies to do atomic minerals mining. Following this, Kerala’s mining and geology department started measures to terminate the lease of the KMRL.
Kuzhalnadan further claimed that when the process to take back the land was in progress, the CMRL made a direct petition to the chief minister and the CM intervened directly, citing the copy of a government file with a note from the principal secretary industries. The note by the official on the document with subject ‘Mining leases of beach and sand minerals granted to KREML (a joint venture promoted by CMRL)’ read, “Please process this. He may need an in-principle approval before seeking law vetting. CM is reviewing this on 4/9/2019. Let be ready with the PPT.”
Kuzhalnadan said that if the CM was reviewing a file that did not belong to his department, there should be substantial reasons. He also produced an internal circulation notice issued to the departments concerned which left the final decision on the matter to the chief minister whether to terminate the leases or seek a legal opinion on it.
The Congress MLA alleged that the options including the legality of giving the operational go-ahead to a joint venture promoted by KMRL was considered to save the controversial company. He also noted that though the lease of KMRL was terminated, no action has been taken to take back the land from the company.
Kuzhalnadan added that this is only the first part of the story and there are more parts to this whole scheme!
CPI(M) Central Committee member and former minister Dr T. M. Thomas Issac reacted to Kuzhalnadan’s allegations on Facebook.
“KMML, a state PSU and IREL, a Central PSU, have the permission to mine sand from Thottappilly Pozhi and extract Ilmenite,” he wrote.
Issac noted that CMRL can only buy Ilmenite from these PSUs and this has been the arrangement during the successive governments of the UDF and the LDF.
“However Kuzhalanadan is trying to create a narrative that Veena Vijayan’s service agreement with CMRL is the result for brokering CMRL’s purchase of ileminate!”
The former minister also raised the allegation that it was the UDF governments that tried to privatise black sand mining in Kerala’s coasts, and that the LDF fought it and stopped it.
