Karunakaran faces charge-sheet

Referring to the controversy over the inclusion of Congress leader Oommen Chandy, who was finance minister when the deal was finalised, it is learnt that the Vigilance team is not in favour of including him in the list of accused as he did nothave a positive role in the conspiracy. The matter lies pending legal opinion.

The team, which conducted the detailed investigation into the controversial import of palmolein from Malaysia through a Madras-based private firm, detected irregularities to the tune of Rs 2.8 crore. The Vigilance report has alleged that K Karunakaran, then chief minister; S Padmakumar, T H Musthafa, Zacharia Mathew, then chairman of Civil Supplies Corporation); and Gigi Thompson, then managing director of the Corporation had misused their official position to enter into a criminal conspiracy with two private firms — Power and Energy Limited and M/S Mala Trading Corporation — by violating the procedure for such an import.

The investigation had revealed that K Karunakaran had met the directors of Power and Energy Pvt Ltd and their representatives in India and Mala Trading Corporation (Madras) in New Delhi prior to October 4, 1991, and hatched a criminal conspiracy with these firms. It was also alleged that the Civil SuppliesCorporation’s decision to import 15,000 metric tonnes of palmolein through these firms was in pursuance of this conspiracy. The palmolein was imported during the period October 4, 1991 to April 8, 1992 from the Malaysian company.

The deal amounted to violation of rules and procedures laid down by the state and central government in the following manner:

The proposal was taken up with the Centre at a time when there was no real requirement for direct import by the state government as palmolein was being issued to the state by State Trading Corporation. The quantity proposed for such import was far in excess of the requirement in the state for the projected period of time.

Various important conditions stipulated by the Union Government while permitting the import like price limit for procurement, terms of payment and fixation of retail price through the PDS were violated.

Moreover, the decision was taken without consulting Finance Department. The Manager Director of the Civil Supplies Corporation signedthe agreement with the private firms on November 29, 1991, without the sanction of the government and without specifying the price.

The price was fixed later, on January 24, 1992, at $405 per metric tonne which was far above the average procurement price. Since the price escalation clause was not written in the agreement, the subsequent rupee-dollar fluctuation was disadvantageous to the State and advantageous to the foreign seller.