Corruption in India: A Case Study

Part I: The Players

I know that corruption in India is pervasive – it touches every aspect of daily life. Yet everytime I hear another story, whether of petty corruption or grand larceny, I am head-shakingly shocked; incredulous. I’m usually not in one place long enough to have to face the small payoffs or to follow the grand cover-ups from start to finish, but this one issue that has come up affects me, my friends and all of Pondicherry and the neighboring coastal areas of Tamil Nadu.

Background

The Government of Pondicherry has offered a sweet-heart deal to a developer, Subhash Projects & Marketing Limited (SPML), to build a deep water port in Pondicherry. Not only will this be an environmental disaster, but everything about this deal is a scam – from the premise of the project (the port) to the awarding of the contract. You can read about the environmental issues on Mark’s blog, as well as on the Save Our Beach blog set up by the Pondicherry Citizens Action Network, which includes a pages with downloadable presentations and documents. I will go into more detail on the scam in a future posting. First, I want to introduce the players.

C.S. Khairwal, Chief Secretary to the Government of Pondicherry

• Khairwal joined the Indian Administrative Service in 1974 and has a long history of corruption.
• C.S. Khairwal is number one on the Central Vigilence Commission (CVC) list (List “A”) of officers against whom the commission has “advised launching of criminal proceedings” since 1 January 1990.
• In December 1997, the CVC advised prosecution for Khairwal’s misconduct as Joint Secretary at the Ministry of Surface Transport.
• He was prosecuted by the Central Bureau of Investigation (CBI) for possessing “disproportionate” assets – 28 “immovable” properties valued at Rs. 20 million.  The CBI “failed” to file the appropriate papers that would have permanently seized Khairwal’s properties, so they were released back to him.
• He was arrested with a mistress and actually spent 2 days in Tihar jail.
• Khairwal was prosecuted by the CBI for illegal possession of a huge quantity of foreign liqour.
• The Central Government, rather than suspending Khairwal for his crimes, “retired” him.  He promptly moved from New Delhi to Pondicherry, where he as reinstated at a higher level than his previous post. (C.S. Khairwal’s home in Pondicherry, complete with an indoor, basement, swimming pool, extends onto half of the road in front of the building. The road has to take a jog around his house.)
• Khairwal is closely connected with the SPML, the developer to whom the port contract was awarded.  The representatives of  SPML stay at his home when they visit Pondicherry.

Subhash Projects & Marketing Limited (SPML)

“Subhash Projects & Marketing Ltd. (SPML) is India’s leading engineering, construction and project management company with more than 25 years of experience in large-scale turnkey projects in the public and private sector. Having successfully undertaken over 350 projects in the areas of water & power management, power distribution, infrastructure and environmental projects, and with a well-qualified and highly skilled team of more than 1000 engineers, the Subhash Group is geared to build a future that India has never seen.” From the SPML website

• On 28 January 2004, SPML was debarred from accessing the securities market and dealing in securities for 5 years by the Securities Exchange Board of India (SEBI) for price manipulation, irregular subscriptions, misstatements and nonlisitng of shares. That period was reduced to 3 years on 13 December 2006 by the order of the Securities Appellate Tribunal (SAT), Mumbai.
• SPML has no experience in building or managing ports. In fact, it was originally considered and subsequently rejected by the Governmet of Pondicherry for “want of experience.”
• SPML was indicted and punished with fines by the Calcutta High Court and Supreme Court for obtaining contracts through underhanded dealins with the Ministry of Power.

Part II  – The Scam – coming soon.