Chennithala says CM rigged E-Mobility selection process to favour Swiss company

Chennithala reiterates corruption charges in e-mobility project, PwC clarifies deal
Kerala Chief Minister Pinarayi Vijayan, Opposition Leader Ramesh Chennithala
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Opposition leader Ramesh Chennithala has taken the E-Mobility corruption charge to the next level. On Tuesday, Chennithala alleged that PricewaterhouseCoopers (PwC) was picked as a consultant to award the contract of supplying electric buses to HESS, a Switzerland company Chief Minister Pinarayi Vijayan was interested in.

He said PwC had to be roped in because a joint venture of HESS and government-owned Kerala Automobiles Limited (KAL), with controlling stake for the foreign company, had to be called off after the then chief secretary Tom Jose and additional chief secretary (finance), with the approval of finance minister T M Thomas Isaac, had opposed the deal.

PwC, in short, was to be used as an instrument to rig the selection process in favour of HESS. Chennihala accused the Chief Minister of indulging in “favouritism”.

Chennithala said discussions were held with the Swiss bus building company HESS since 2018. He hinted that Chief Minister Pinarayi Vijayan himself had held talks with HESS in Switzerland. “It will be quite instructive to note that the Chief Minister had recently travelled to Switzerland,” Chennithala said.

Vijayan had visited Switzerland as part of his European tour in May 2019. He had visited the Federal Palace at Bern and also paid a visit to the Swiss Parliament. Nonetheless, there are no records to show Vijayan had met with HESS representatives.

According to Chennithala, HESS was dictating terms. It was the Swiss company that mooted the joint venture, he said. But the plan had to be dropped after the Chief Secretary and the additional chief secretary (finance) intervened.

Cost factor, Isaac's role

Chennithala produced a note sent by the Chief Secretary in 2018 to the Transport Department. “How was HESS selected? Was there a due process?,” the Chief Secretary asks in the note.

Chennithala said the Finance Department's intervention was stronger. In a note written on August 9, 2019, the finance secretary says: “The draft MoU provided by the Transport Department lacks clarity on a number of issues. Government or any agency of the government like KAL cannot enter into an agreement with a foreign company without clarifying those issues.”

The plan was to purchase 3000 e-buses and the finance secretary seemed concerned about the cost. “Government of Kerala cannot procure such a large number of buses without tender procedures and without knowing the final price. Government of Kerala may not have resources to procure 3000 e-buses costing Rs 1 to 1.5 crore each. Administrative Department should clarify what would be the source of the fund. The Finance Department would not recommend going ahead with such an MoU by KAL unless here is clarity on the commitments,” the note says.

“The note was approved by the finance minister,” Chennithala said. According to him, it was these interventions that put an end to the MoU.

PwC as a conduit for HESS's re-entry

He said it was to bypass these objections that PwC was chosen as the consultant. He also charged that the representatives of HESS were at the meeting convened by the transport secretary to pick PwC as the consultant.

Chennithala then hurled a series of posers at the Chief Minister.

Opposition Leader Ramesh Chennithala
Opposition Leader Ramesh Chennithala

Chennithala's posers

One, on what basis did the KAL attempt a tie-up with a foreign company?

Two, how was it possible to pre-fix the price of the e-buses?

Three, who decided that HESS should get a controlling stake in the JV?

Four, why was the government unwilling to invite global tenders for a project worth Rs 6000 crore.

Five, wasn't it after the MoU was opposed by the finance secretary and the Chief Secretary that it was decided to enlist PwC to prepare the DPR for the project.

Six, how could the representatives of HESS take part in a meeting called by the transport secretary to pick PwC as the consultant. Who invited them to the table?

“Had it not been for the COVID crisis, they would have signed the contract by now,” Chennithala said and added: “It is for the first time I am hearing of a situation where a consultant is chosen after deciding the firm to which the contract would be awarded.”

Twin PwCs

Earlier on June 29, rejecting Chennthala's initial charges, the Chief Minister had said that Chennithala had confused PwC the audit firm with PwC India the consulting firm. Chennthala said Securities and Exchange Board of India had specifically said that the entire PwC network should be banned.

“SEBI terms as unacceptable an international company's attempts to hoodwink law by operating in different names. It clearly says that for the ban to be effective, the network of PwC itself should be banned,” Chennithala said.

SOP for NICSI firms

In response to the charge that tenders were not invited, the Chief Minister had said PwC was empanelled by National Informatics Centre Services Inc. (NICSI) and therefore could be chosen without tenders.

Chennithala said there was a standard operating procedure (SOP) in place to award work for NICSI-empanelled firms. “If the government wants to assign work to such companies NICSI will have to be first informed. The government has not done that,” he said. “The issue was not taken up in the Cabinet either,” he added.

Not blacklisted, PwCPL clarifies after Kerala leader's remarks

PricewaterhouseCoopers Private Limited (PwCPL) in a statement released on Tuesday said it is not a blacklisted firm as claimed by the Opposition leader Ramesh Chennithala twice in the past three days.

The London-headquartered firm's statement said it wishes to clarify that the entity performing work for the Kerala government's Department of Transport is PricewaterhouseCoopers Private Limited (PwCPL).

"PwCPL is a limited liability company which provides consulting services and is not an audit firm. The SEBI Order of January 2018 neither applied to PwCPL nor did it impose any restriction on PwCPL whatsoever."

It also pointed out that even otherwise, the said SEBI order, which had restricted the PricewaterhouseCoopers audit firms from providing audit services for two years, was set aside by the Securities and Appellate Tribunal (SAT) in September 2019.

"With SEBI subsequently appealing the SAT order before the Supreme Court, the matter is now sub judice. However, there is no stay by the Supreme Court on the ability of any Pricewaterhouse audit firms in India to render their services," said the firm.

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