The historical feat of the first-ever masala bond mobilisation drive by a state government in the country has revived the SNC-Lavalin ghost.
Opposition leader Ramesh Chennithala had alleged that CDPQ, a Canada-based institutional investor and one of the main investors in the masala bond floated by Kerala Infrastructure Investment Fund Board (KIIFB), has stakes in SNC-Lavalin, the Canadian company whose supply contract with the Kerala State Electricity Board (KSEB) in the late 1990s had put the then power minister, and current chief minister, Pinarayi Vijayan in the dock. (The masala bonds, so called because they deal only in Indian rupees, had fetched KIIFB Rs 2150 crore.)
KIIFB Chief Executive Officer and former chief secretary K M Abraham, in his counter, admits that CDPQ has investments in SNC-Lavalin. "CDPQ is a government company in Canada. From the annual report of SNC-Lavalin available on its website, it is seen CDPQ has business transactions with SNC-Lavalin," he said. Then he adds: "The public website also shows that along with CDPQ there are other pension funds of Canada having investments in SNC-Lavalin. But SNC-Lavalin or none of the other institutions in which CDPQ has invested can have any ownership in CDPQ as it is a government body of Canada."
Hence, Abraham said it would be illogical to connect any of the many investments of CDPQ, whether in SNC-Lavalin or in any other body, to the masala bond deal of KIIFB.
Chennithala had gone so far as to say that the transactions related to SNC-Lavalin increased whenever the LDF came to power.
CDPQ is a government body in Canada which was created in 1965 under an act of the national assembly of Quebec. It is a public sector body whose entire beneficial interest is held by the Government of Canada. It is an institutional investor which manages pension funds and insurance programmes, and has its headquarters in Quebec. It is the second largest pension fund in Canada. CDPQ has investments in 75 countries. From data available publicly, it is seen that the investments by CDPQ totals $220 billion, equivalent to Rs 15.40 lakh crore. It has offices in eight countries, including India.
Further, Abraham said that CDPQ had put money in various infra projects in the country. “The company makes its investments under the Foreign Portfolio Investor (FPI) or Foreign Direct Investment (FDI) regulations approved by the government of India. CDPQ has also purchased 130 million worth of securities issued by the Indian government,” Abraham said.
What is more, CDPQ and the National Infrastructure Investment Fund (NIIF) set by the Centre are in talks to partner various infra projects in the country.
A ‘masala bond’, like spices from which it has derived its name, is an India-flavoured investment mechanism. It will deal only in rupees. Though it will be floated in a foreign country, the bond buyers will have to pay not in pound sterling or dollars but specifically in rupees.
SNC-Lavalin: CAG and the HC
The Kerala High Court, in its August 23, 2017, verdict, had absolved Pinarayi of any wrongdoing in the SNC-Lavalin deal. The court did not give a clean chit to the deal, but stated that it was made behind the back of the then power minister.
However, the CAG report tabled in the Assembly on March 31, 2005, begs to differ. The report noted that it was after discussions with a delegation headed by the power minister in October, 1996, that a contract for technical services signed seven months before was converted into a contract for the supply of goods and services for the renovation of Pallivasal, Sengulam and Panniar power stations. What was originally a contract for Rs 17.89 crore in February, 1996, swelled to Rs 169 crore by October of the same year, barely four months after Pinarayi assumed charge as power minister.
What the CAG report found most curious was that the “ministerial delegation” that conducted the deliberations with SNC did not even consider the fact that SNC was only a consultant intermediary and not the original equipment manufacturer.