Masala Bond scam: Did Kerala government lie about the bond issue being ‘public’; major corruption suspected

Thiruvananthapuram: When the much hyped Masala Bonds were issued by Kerala government entity, Kerala Infrastructure Investment Fund Board (KIIFB) the Finance Minister, Thomas Isaac, had said that it was a public issue. However, this is now being challenged by the opposition. The bond issue was places as a private issue in contradiction to what the minister claimed.

Besides, CDPQ, the company who reportedly bought the bonds, has interests in SNC Lavalin, the very same company which was involved in a corruption case when Pinarayi Vijayan was the Electricity Minister in 1996.

Another point of contention is the high interest rate of the Masala Bonds, which is 9.732%. This means that CDPQ stands to gain immensely from the bargain where as Kerala faces a huge loss in the deal.

In five years the government needs to pay a hefty amount of Rs. 1045 crore as interest on a Rs. 2150 crore bond issue. The only beneficiary of this amount is the Canadian company, CDPQ, with which KIIFB has entered into a deal.

What makes the deal disadvantageous to Kerala is the face that the government totally ignored other options to raise funds which would have cost less to the exchequer. For example, the loan taken for Kochi Metro was just 3%, a far cry from the interest rate for the Masala Bond.

The opposition leader of Kerala, Ramesh Chennithala, showed the ‘Note Offering Circular’ in which it states that the Masala Bond is a ‘private placement in Quebec’.

If this is true then the Finance Minister, Thomas Isaac, has lied through his teeth, with utter disregard for the people and the dignity of his official position. Moreover, this means that the government of Kerala got into a deal with CDPQ favouring them with high interest rates.

Why did the government enter into a deal with CDPQ on such a high interest rate when other options were available? Were there any incentives both material or non material given to individuals or entities to pull off a deal that is totally disadvantageous to the people of Kerala?

CDPQ has investments in real estate and infrastructure and it carries out those work under the label CDPQ Infra. However, CDPQ Infra executes these works through many companies, one being the tainted SNC Lavalin, which is black listed in Kerala because of corruption charges involving the Chief Minister Pinarayi Vijayan.

When we join the dots, what emerges is a major corruption involving hundreds of crores of rupees. Maybe the biggest scam which Kerala has witnessed is waiting to be unraveled. The opposition are training their guns at the ruling party and much is to be seen in the coming days.


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