The Karnataka High Court has issued notices to Cogentrix, the Karnataka Electricity Board (KEB), China Light and accountancy firm Arthur Anderson to submit their counter affidavit on a public interest litigation alleging kickback payment to the tune of HK $191 million.
After hearing the preliminary submissions by the petitioner, Arun Kumar Agarwal, Justice G C Bharuka ordered issuance of notices to all the parties named in the petition to submit their explanation. The judge posted the petition to June 6 for further hearing.
The petitioner placed before the court documents to support the allegation that kickbacks have been paid to get the project. The statements reportedly shows that the China Light and Power has spent HK $ 122 and 69 million during 1994-95 and 1995-96 as developmental cost. After Mangalore Power Company Ltd (MPC) was incorporated it entered into an agreement with China Light to channel the funds through its arm in tax heaven British Virgin Islands where China Light (International) is incorporated and whose balance sheet shows spending HK $191 million as developmental cost for Indian project.
Also Read
However, the balance sheet of Mangalore Power Company Ltd created by Cogentrix and China Light to implement the Rs 4,200 crore project, the petitioner showed an expenditure of just Rs 37,480. The auditors from Arthur Anderson and Associates whose country head Vijay Sahni had signed the balance sheet for the year ending March 1995 has failed to incorporate auditors fee and other expenses.
The petitioner contended that non-inclusion of auditors fee of Rs 3.6 lakh, salary and legal fee rent spent by MPC not figuring in the balance sheet was a major violation of contractual obligation as enunciated in the PPA signed by MPC with KEB. This, he argued, suggests that there was an unholy alliance between the auditor and the company to suppress material information from the public and coincidentally both Cogentrix and Arthur Anderson hail from the United States.
Quoting from the techno-economic feasibility report submitted by Cogentrix, the petitioner said, the US corporation and its partners will be bringing in just Rs 283 crore while the Indian investment is pegged at over Rs 1,500 crore of which KEBs investment would be Rs 100 crore.