CURRENT ISSUE JUNE 26, 2006

Chief Minister V.S. Achuthanandan had never expected it to happen too soon. Those brave words of the election campaign, it seems, have already become a liability. The first time the chief minister had to eat his own words was when the new LDF Government decided to go ahead with the same projects he had famously opposed in the past. They
include the Rs 2600 crore-Smart City project in Kochi which VS had earlier called a huge real estate scam, and the Rs 6500 crore Express Highway project which he had dubbed a "rakshasappaatha", the devil's path. The latest to come haunting VS is the lofty promise he made immediately after the new cabinet was sworn in on May 18. The promise
that his cabinet would have no tainted member as against the last UDF ministry which had many ministers accused of charges ranging from sleaze to even sex crimes. "The moment a minister comes under a cloud,
he would be out of my team," thundered VS.

But it has been barely a month since this promise was made than a member in the LDF cabinet stands accused in two huge scams. The name under the scanner: P.J. Joseph, minister for public works and chairman of the Kerala Congress (J). Both the scams –totalling about Rs 500 crore -- had occurred while Joseph was minister of education and public works in the previous LDf ministry during 1996-01.

Interestingly, both the scams were unearthed by the legislative committees headed by LDF leaders while they were in the Opposition. The Opposition UDF has asked the chief minister to carry out his promise not to let any tainted minister continue. Achuthanandan has asked an LDF team to urgently look into the issue. Rumours are strife that Joseph would be asked to step down. "We trust VS to keep his word," said Opposition leader Oommen Chandy. "Let me study the issue and we will soon come to a decision," says Achuthanandan. Joseph on his part says, "Let the Lok Ayukta investigate and I will quit if it finds me prima facie guilty. But why did the last UDF government initiate any steps against me? I am going to sue KPCC President Ramesh Chennithala for raising baseless allegations against
me."

The first scam is related to the irregularities found in the utilisation of a state government grant of Rs 45 lakh by an NGO, the Federation of Indian Floriculturists (FIF). The FIF was headed by Joseph himself while he was a inister in the previous LDf cabinet. The state vigilance department has been probing the case for the last three years and a Legislative Committee recently found the charges true. According to Vigilance, the FIF has not filed a satisfactory utilisation certificate for the grant.

However, this is very small compared to the other scam which is related to the alleged diversion of Rs 433 crore in connection with the Maithri Housing Project under which four lakh houses were to be built for families below the poverty line at a cost of Rs 30,000 each. The scheme launched by the previous LDF government was implemented by
the Kerala State Housing Board , a statutory body under the government and then headed by the the Kerala Congress (J). The Maithri schme has been widely lauded as three lakh houses were constructed under the scheme for the state's three lakh poor families. But a string of inquiries in the past five years have found gross irregularities worth hundreds of crores in the project which has now almost driven the KSHB to bankruptcy. KSHB has defaulted on the repayment of the monthly installment of Rs 86 crore scheduled for March 31 and HUDCO officials have arrived in Thiruvananthapuram to meet government representatives to expedite the repayment. HUDCO has asked the state overnment to immediately pay the pending installments due to it on all the loans it has disbursed for various infrastructure projects launched by the government in the past 10 years. According to various investigations only 30 per cent of the targeted number of houses were constructed and most of the money was pocketed by politicians and middlemen. The irregularities in the Maithri project have been revealed by several inquiries, including the egislature's Public Estimates Committee, the Accountant General, Inspection wing of the state Finance Ministry, KSHB's own auditors and finally an independent Chartered Accountants firm commissioned by the KSHB itself.

The major findings are:
There are no records for the utilisation of Rs 420 crore, out of the Rs 1255 crore KSHB received from various sources during 1997-01. There are records only for the construction of 2.76 lakh housing units at a total cost of Rs 803 crore. Of the total loan of Rs 825 crore received from HUDCO to construct 3.89 lakh houses there are records only for the disbursal of Rs 677.40 crore to construct 2.76 lakh houses.

KSHB has diverted Rs 234 crore paid by the local bodies as "annuity funds" towards repayment of the Maithri cheme's poor beneficiaries. This amount was to be used to repay the HUDCO loan but was diverted for other purposes, leading the total loan amount to cross Rs 1000 crore from the original Rs 803 crore owing to the default.

The auditors have unearthed stunning incidents of sleaze in connection with the implementation of the Maithri project. The most dramatic incidents have come from one panchayat alone, Vannappuram, next to Joseph's native Thodupuzha in Idukki district. According to KSHB records, a total of Rs 1.5 crore were disbursed here to build 500
houses at the cost of Rs 30000 each. But auditors have found that 186 persons have availed of the amount and have not constructed houses. A total of 73 persons have received loans for more than one house each, 50 persons who received the loans did not have the required financial solvency and 21 persons have received loans in non-existent addresses. There are also incidents when hundreds of crossed cheques –mandatory- were converted to cash cheques and issued to many. There are also hundreds of cases when the KSHB records show a particular cheque number as drawn on behalf of one person but issued by the local bank to a different person and actually received finally by yet another. Joseph has accused the last UDF government and also detractors in the LDF in this regard. The UDF has asked him to step down and the Youth Congress has launched an agitation. In Kozhikode, CPI(M) activists roughed up Youth Congress workers when they held a black flag demonstration at a function attended by the chief minister and Joseph. Not a very good sign for the government.

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