Contents   Abstract 1. Introduction 2. 'Deep Politics', Corruption and the Repercussions of the Liberalisation Process in the Power Sector 3. Critical Perspectives 4. Background to the MPC Controversy 5. Agarwal and Kantha – PIL and the Ensuing Judgement on Corrupt and Deep Political Interventions 6. Appeal to the Supreme Court 7. Sabhapathy's Allegations of Corruption Involving MPC and Cogentrix' 8. Further Deep Political Concerns over the MPC Project 9. The Findings of the Neeri Report 10. Deep Politics and the Ministry of Environment and Forests 11. Deep Politics, The Targeting of 'Opponents'of the MPC Project, and the Suppression of Local Rights 12. Deep Politics and the Involvement of US Government Favouring MPC 13. Deep Politics and the Use of a Flawed Report and REIA 14. Deep Politics, The Repercussions of the NEERI Report and Suppression of Petitioners Right to Information 15. A Controversial 'Deep Political' Judgement? 16. Was the Judgement Leaked? 17. Further Contemptuous Actions 18. The Exit of Cogentrix from MPC 19. Conclusion   Bibliography  Download

 

Deep Politics, Liberalisation
and Corruption: The Mangalore Power Company Controversy

 Desmond Fernandes
De Montfort University, Bedford, UK
dfer@dmu.ac.uk

 and

Leo Saldanha
The Environment Support Group
Bangalore, India
esg@bgl.vsnl.net.in

Abstract

This paper examines the arduous political and legal struggle against the Cogentrix/Mangalore Power Company (MPC) power plant in Dakshina Kannada district, Karnataka, India. Using the key concept of 'deep politics', links are drawn between the liberalisation policy in India and corruption. The avowed need for liberalisation, specifically in the Indian power sector, is analysed in an elaborate manner by examining the economic aspects of generation, transmission and distribution of power in India prior to - and post - liberalisation. Drawing upon the deep political experiences of Enron, the case of Cogentrix is followed from the time of its arrival in India, the many highs and lows in the struggle against the project, through to its hard fought exit. The attempt to resurrect the MPC project through deep political means is also charted. The findings of this study suggest that liberalisation backed initiatives of the 'model' Cogentrix-MPC kind have merely served to corrupt governmental and judicial systems further, and sought to constrict those very democratic spaces which, in the past, have provided at least some theoretical measure or opportunity for redress of public grievances.

 

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This is a Commentary published on 10 January 2001.

Citation: Fernandes D and Saldanha L, 'Deep Politics, Liberalisation and Corruption: The Mangalore Power Company Controversy', 2000 (1)Law, Social Justice and Global Development (LGD). <http://elj.warwick.ac.uk/global/issue/2000-1/fernandes.html>. New citation as at 1/1/04: <http://www2.warwick.ac.uk/fac/soc/law/elj/lgd/2000_1/fernandes/>

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1. Introduction

Inthe early 1990s, the Indian government committed itself to a World Bank-International Monetary Fund (IMF) inspired economic liberalisation programme as part of its New Economic Policy (NEP). Official announcements at the time had suggested that this programme would usher in a new era of sustainable economic growth, efficiency, public accountability, transparency and an open, democratic and less corrupt governance. Through a process of privatisation, Trans-National Corporations (TNCs) and Independent Power Producers (IPPs) were to be actively approached and invited to present a lead in instilling model ethical codes of conduct in various sectors of the economy, including that of power generation, transmission and distribution (T&D). Karp and Kaye, for example, note that in the power generation sector, a US TNC, Cogentrix Energy Inc. (Cogentrix) was invited to proceed with a US $1.1 billion project which was supposed to be the model for India's new private power policy (Karp and Kaye, 1996, 52).Cogentrix's model stance, one was informed, extended towards understanding that its customers were not only end users, but also:

Special incentives were offered to stimulate TNC and IPP investment, including:

The High Court of Karnataka has noted that the Government of India's:

A political decision was also made to ensure that the first eight TNC initiated power projects to be approved and recognised by the government were to be accorded 'fast track' status[ 3], promised sovereign counter-guarantee by the Union Government, in case the largely bankrupt State Electricity Boards (SEBs) defaulted on payments for power supplied. The offloading/unbundling of SEBs was mooted with the intention of privatising the entire power chain of generation-transmission-distribution systems. The tariff for the supply of power by the private parties was as follows:

In the case of Cogentrix, it was to be favoured in more than one way:

Mehta further concludes that profits from the project, according to conservative estimates, were expected to total about US $ 120-180 million a year. Officially, the return on equity was therefore expected to be of the order of 28.5%, or US $ 80 million per year (Mehta, 2000).

Enron's Dabhol Power Corporation (Enron/DPC) and Mittal-Ispat-GEC Alsthom-EdF of France's Bhadrawati project were to also be favoured in a number of ways. When it was discovered, for example, that the official rate of return to Enron would have rendered:

Consequently, a new notification was provided which ensured that the rate of return in Enron's case could now stand at 31.5% (Mehta, 1999). It was officially agreed that:

Electricity laws were also completely reinterpreted to favour the Enron and Bhadrawati projects. The projects were to given additional benefits through exemptions from Section 10(15)(iv) and Section 10(6A) of the Income Tax Act, 1961; Section 205A(3) of the Companies Act; the Bombay and Maharashtra Sales Tax Act; payment of stamp duty and payments of water tax and octroi (Mehta, 1999).

These ambitious and highly controversial power sector reforms were adopted by the government on the grounds that:

As Linda Powers, an Enron employee, was at pains to point out:

Ron Somers, Managing Director of the Cogentrix linked MPC project, had similarly noted that the standard to be set by (his) proposed project was likely to serve as the type of model and benchmark for future projects which Indian planners and politicians would use to ensure that complete transparency took place and environment-friendly programmes were being promoted (The Hindu, 1995a;The Hindu, 1995e).

It was also argued that the crisis relating to the country's growing demand-supply gap would never be resolved if one remained sorely dependent upon corrupt and inefficient, deep political operational structures of the SEBs and Public Sector Power Generation Enterprises. As Bhupal Singh, ex-chairman of the Uttar Pradesh State Electricity Board and Chairman of the All India Power Engineers Federation has confirmed, such inefficiency in the public sector certainly existed due to:

In analysing the actual progress of these reforms in the power and other sectors, however, it has become abundantly clear that several of these stated objectives have not been achieved. Harriss points out that the recent exposes of corruption scandals have indicated that the scope and range of corruption has increased (tremendously) rather than decreasing during the last decade of liberalisation (Harriss, 1998). According to Harriss:

In Karnataka, the government promoted 'model' Cogentrix and MPC project would also appear to have been embroiled in a series of corruption scandals…The key players in these corrupt exercises, moreover, seem safe, heavily protected as they move around or hiding in safe bunkers' (Harriss, 1998, 80).

As S S Gill in his path-breaking study, The Pathology of Corruption, has observed:

In the power sector, Bhupal Singh has concluded that these reforms have clearly failed to achieve the stated aims:

V Ranganathan, Professor of Economics at the Indian Institute of Management (IIM), Bangalore, has also detailed the way in which these reforms in power sector have been effected:

A report by Assadi confirms that heavy concessions to TNCs via the reform process have been granted at the cost of taxpayers:

Assadi has also contested the claim that the public will stand to benefit from lower electricity prices with the process of liberalisation:

More recent assessments, by Mehta (1999) and Mahalingam (2000) would appear to confirm the basis of Assadi's concerns. Mahalingam, for instance, observes that Enron's DPC, in its first bill to the Maharashtra State Electricity Board (MSEB), is charging electricity at the rate of Rs. 5.92 a kwh, which is a far cry from Rs. 2.03 a kwh (as) specified in the PPA (Mahalingam, 2000). The Hindu (The Hindu, 1999b) also confirms that the most recent cost estimate for the Cogentrix linked power project 'works out at Rs. 4.42 a unit based on the assumption that the project will be fully operational by April 2004. Further, the cost estimate refers only to the first year of generation. The cost of the project, as such, go up substantially with the weakening of the rupee vis-a-vis the dollar in recent years' (The Hindu, 1999).

2. 'Deep Politics', Corruption and the Repercussions of the Liberalisation Process in the Power Sector

A number of academics, business and political analysts, Central Electricity Authority (CEA) and SEB officials/former officials have, equally alarmingly, begun to document the way in which the liberalisation process has further protected inefficiency, increased corruption and entrenched 'deep political systems' within the power sector. Corruption, for the purposes of this study, is broadly defined to:

To Yves Meny, corrupt activities of this nature can involve:

Saldanha, Fernandes and Mathai clarify that the following actions should be considered as a violation of rules and norms associated with what is perceived to be the general interest - or public ethics - in society:

A 'deep political system', as defined in this study, is also one in which institutional, non-institutional and para-political bodies, criminal syndicates, politicians, judges, media, TNCs and leading government employees have been able to 'habitually resort to decision-making and enforcement procedures outside as well as inside those publicly sanctioned by law and society (Scott, 1996, xi) [ 8] in order to push through highly controversial and corrupt, environmentally destabilising developments which have been bitterly opposed by community groups and people's movements:

As Peter Dale Scott has clarified, these deep political systems or processes, by operating through corrupt means, can also involve collusive secrecy and law breaking, necessarily threaten the very fabric of democratic societies:

Citizens rights organisations, NGOs, concerned politicians, community groups and people's movements in the region, lawyers, government employees, academics and members of the public who dare to question, oppose and/or expose this system, will necessarily discover that their views and initiatives are either being ignored or targeted by this system.

According to Bhupal Singh deep political systems are certainly being strengthened by the liberalisation reform process that is being undertaken in the power sector:

These views are also shared by M I Baig (Chairman) of the Central Electricity Authority CEA), Abhay Mehta, M.R. Srinivasan (Member of the Indian Planning Commission: Energy, Science and Technology) and S.N. Roy (former CEA chairman):

• 'The entire power generating system has been hijacked by vested interests and politicians'- M. I. Baig (The Hindu, 1997).
  
• 'The subversion of the law has graduated from the farcical to the tragic'- Abhay Mehta (Mehta 1999, 179). The so-called rationalisation, privatisation and unbundling of the SEBs, which were purportedly induced by the dictates of the World Bank (have also scandalously resulted) in the sale of assets worth several tens of thousands of crores, needless to say, for a song' (Mehta, 1999, 178).
  
• 'Government policies pertaining to power have gone against all wisdom and rationality. The government has abdicated its responsibility'- M.R. Srinivasan (The Hindu, 1997).
  
• 'The government is exaggerating the country's requirement of an additional 1,43,000 MW by 2001. If rampant corruption and power thefts (during the post-1991 liberalisation phase) are curbed, then we can do with a net addition of only 16,000MW. This would lead to a saving of more than Rs. 1,80,000 crores'- Mr. S.N. Roy (The Hindu, 1997).

In the case of the Enron linked DPC liberalisation initiative in Maharashtra, furthermore, Mehta has exposed the way in which liberalisation and reform have directly led to 'the complete and total abdication of even a semblance of what could be construed as (good) governance' in the region (Mehta, 1996, 177). As a consequence of deep political processes which have attempted to push through the environmentally, economically and politically questionable project, numerous human rights violations have been committed. The collusion of State Reserve Police, local police and DPC security guards has resulted in a situation in which 'goondas'- who have issued death-threats to community leaders - have been protected. Opponents of the project have been placed on trumped-up, attempted murder charges and have also frequently been physically attacked, injured, arrested and confined in conditions, which Amnesty International has described as amounting to cruel, inhuman and degrading treatment (Mehta, 1996).

According to Human Rights Watch peaceful protests against the way in which the Enron backed project is being imposed and developed, have:

Deep political processes in this venture have also led to the:

As Human Rights Watch has concluded:

3. Critical Perspectives

These critical perspectives have suggested that liberalisation and reform measures - especially within the power sector in India - have facilitated corrupt and deep political processes. In the case of the 1000 MW MPC project, however, it is instructive to note that the project's backers and representatives of the State Government of Karnataka have officially denied that any corrupt or deep political, irregular actions have been undertaken in order to promote this liberalisation initiative. Several investigative journalists, research bodies, politicians, academics, NGOs and community/public interest groups have contested these views and argued that the Cogentrix linked MPC project has, in fact, further corrupted the political system to a frightening extent.

It has been argued that deep political and/or corrupt actions - which have been undertaken in order to promote this liberalisation project - have:

This article details and critically evaluates the nature and basis of these allegations, claims and counter-claims. In seeking to analyse whether any mechanism of accommodation exists, or has existed, between parties and/or individuals to effect secretive, corrupt and/or deep political transactions to favour the MPC liberalisation project, the article will necessarily systematically focus upon a number of alleged and/or proven, covert or suppressed, processes and actions which have been identified by a number of community groups, investigative reporters, politicians, academics, NGOs and environmental/human rights campaigners. The repercussions of any identifiable deep political and corrupt actions will also be examined.

It has to be acknowledged at the outset, however, that investigations of alleged and/or actual corrupt and deep political actions over the MPC-Cogentrix power project by politicians, members of the judiciary, corporations and their representatives, government ministries and/or their individual representatives are constrained in the following ways. Over the issue of debating the nature of judicial accountability (or lack of it), several analysts and organisations have shied away from publicly criticising and/or academically analysing or commenting upon highly questionable judicial actions over the Cogentrix-MPC affair due to the following constraints which are enforceable in India:

S S Gill identifies other constraints which potentially also stop government officers from reporting the corrupt practices of their superiors:

Deep political and corrupt actions, by their very nature, are often also undertaken in a secretive manner. As Gill has observed, that it is often imperative that the political links are kept hidden to facilitate the success of the enterprise. The very nature of the links makes it very difficult to identify these links and even more difficult to prove in a court of law (Gill, 1998, 193, 198). Moore has arrived at similar conclusions:

This often means that the precise nature of such transactions may never be fully revealed, documented or confirmed. Analysts have also had to contend with dis-information that has been produced[ 9], as well as the refusal of particular politicians, companies (including MPC) and bureaucrats to part with requested information which might shed further light on the matter. Key public domain documents in the possession of the state government and MPC which relate to the Cogentrix-MPC corruption/deep politics controversy, for instance, which should - at the direction of the High Court - have been made publicly accessible and available for inspection remain inaccessible to date and cannot be scrutinised by the investigators and petitioners (Saldanha et al, 2000). It is disquieting to note that several of these key documents - for instance, cabinet papers, records of the deliberations of the Council of Ministers, secretaries and other officers, as well as minutes or records of advice including legal advice, opinion or recommendations made by an officer or a public authority during the decision-making process prior to the executive decision or policy formulation to clear and/or pass the MPC project - are unlikely to ever become public if the proposed Indian Freedom of Information Bill[ 10] becomes law.

Aruna Roy, for instance, argues that if Sections 8d and 8e of the proposed bill are made law, it will be possible for ministers and government officers to ban any scrutiny of such files and records (DH News Service, 2000, 9). Such a process can only serve to frustrate any investigation which seeks 'to know why certain decisions were taken and what role various officials played in the decision making process when such decisions are anti-people in nature' (Roy, as quoted by DH News Service, 2000, 9).

Central Bureau of Investigation (CBI) probes and/or public inquiries into the MPC controversy, which potentially have the capacity to investigate the basis of corrupt/deep political dealings in a more effective fashion (for example, by pressing for and/or obtaining public disclosure of particular confidential offshore banking transactions and/or company/government papers and minutes of meetings, in order to ascertain if any irregularities have taken place to unduly favour the MPC project) have also not been undertaken. Despite requests by public interest litigation groups, concerned MPs, NGOs, High Court of Karnataka (inAgarwal v State), Seetharam (2000, 1) and a number of community organisations[ 11]. Analyses of the Cogentrix-MPC corruption/deep political controversy, consequently, have had to rely upon the limited nature of findings that have been obtained through other types of investigative enquiries.

4. Background to the MPC Controversy

From the time Cogentrix decided to locate a 1,000 MW MPC coal based thermal power plant in the environmentally sensitive coastal district of Dakshina Kannada in northern Karnataka, the project has been resisted actively by local project affected communities on social, economic and environmental ground. Community organisations (many with a popular mass base) which have opposed this mega-project as well as the deep political processes which have accompanied its promotion, include Janajagrithi Samiti of Nandikur (People's Awareness Committee), Environment Support Group, Dakshina Kannada Meenugarara Parisara Samrakshana Samithi (Dakshina Kannada Fishworkers Environment Protection Committee), a number of student organisations, the National Alliance of People's Movement (NAPM) and the Save Dakshina Kannada Campaign.

Almost all the elected representatives from the district, including the Dakshina Kannada Jilla Panchayat (the local government district council), joined issue with these independent people's organisations against the project[ 12]. Public marches and protests against the proposed project in Mangalore and Padubidri (the proposed project site) have attracted the active attendance of tens of thousands of people. A number of financial analysts, politicians, and journalists have also expressed concern and levelled serious allegations of deep political interference and corruption against those who have been directly promoting and facilitating the deal. Leading energy planners and economists have criticised the Karnataka Government for its uncharacteristic zeal in promoting - and seeking to provide questionable clearances for - the project[ 13].

The project has rarely been discussed in the Karnataka State Assembly or Parliament without attendant controversy. Nevertheless, the project has continued to be vigorously promoted by the Karnataka government as a key model for sustainable development initiative, even after two Public Interest Litigation (PIL) were filed against it. The first, PIL[ 14] was filed by Janajagriti Samithi - a committee which works with communities which have been affected by the Cogentrix project. This was filed on the grounds that Government and Cogentrix had:

Arun Kumar Agarwal, a public interest activist and President of the Southern Region of the Indian Investors Protection Council filed the second PIL. It was filed on the grounds that Cogentrix had secured the deal through corrupt and deep political means.

In contrast to the Enron controversy which brought down one Government and promoted another in Maharashtra State, the Cogentrix project has, rather unabashedly, won the consistent and active support of five successive Chief Ministers of Karnataka, across two Governments of different political parties, over eight years. Mr Deve Gowda, former Chief Minister of Karnataka who went on to become Prime Minister of India for a brief period during 1996-97, has been especially targeted with serious allegations of corruption and deep political interference over the deal. Mr George Fernandes, Union Defence Minister, and Ms Maneka Gandhi, Union Minister of State of Social Justice and Empowerment in the present BJP led Government at the Centre, have both alleged that Mr Gowda benefited directly from the deal through deep political interventions and processes.

Fernandes, who was a Member of Parliament in the Opposition during the tenure of Deve Gowda as Prime Minister, had even moved a privilege motion stating that the Prime Minister had clearly resorted to misleading the house in defending the deal (Times of India, 1996a). Just before this, a major controversy had also erupted when Maneka Gandhi had linked Deve Gowda to a Rs 100 crore corruption scandal centred around the Cogentrix backed MPC project. At the time, Maneka Gandhi was a Member of DeveGowda's Janata Dal, and in retaliation for her remarks, she was promptly targeted and summarily dismissed from the primary membership of the party for damaging the prestige and dignity of both the party and the United Front Government (The Hindu, 1996b). In justifying her stance, she had stated that:

Gandhi further substantiated her open opposition to the project and her targeting of Gowda in an article she wrote for the Times of India:

Nevertheless, 'as soon as the Prime Minister of the United Front, who was till recently the Chief Minister of the state that had forwarded the file, assumed office, he was careful to keep the environment portfolio with him. The Cogentrix file was asked for by the PMO (Prime Minister's office) and within two days of the assumption of office, the project was passed' in highly controversial and unacceptable circumstances (Times of India, 1996a). Justifying her attack at the unseemly haste by which the project was accorded environmental clearance, Gandhi had concluded her article with the following comment:

Whilst Gowda, as Prime Minister, consistently denied that he had cleared the project, Assadi confirms that 'a submission of the Karnataka Chief Minister that he (Gowda) had signed a PPA (for Cogentrix/MPC, would seem to suggest) 'that either the Prime Minister or the Chief Minister has bungled' - i.e. clearly lied over - 'the issue' (Assadi, 1996, 2129).

Cogentrix also sought to quash Gandhi's charges by stating that the MPC deal was as clean as a whistle from the corruption angle (Deccan Herald, 1996a). In a point by point rebuttal, the company - seemingly forgetting that it had been recently exposed in a corruption and deep political scandal in Puerto Rico[ 15] - claimed that it could not be charged on any corruption grounds because it had never, as a company, indulged in any unethical business dealing at any time and had never paid kickbacks of any kind to any government. As an American company, Cogentrix had stated that it was subject to a Foreign Corrupt Practices Act, which had ensured that its executives could not indulge in any corrupt activities anywhere. Any corruption charges, it stated, were consequently entirely baseless, needed to be ignored and merely served to needlessly politicise the project (Deccan Herald, 1996a).

To George Fernandes, however, the nature of Cogentrix's rebuttal appeared to be questionably geared towards distracting public attention away from his and Gandhi's central contentions. In response to Cogentrix's public relations drive, he continued to insist that corrupt, deep political interventions had taken place, and demanded that a probe be officially undertaken in order to expose the true nature of the deal. In a Press Conference held in Bangalore during October 1996, he revealed the contents of a letter he had written to Prime Minister Deve Gowda which questioned the exceedingly fast pace at which the project had received clearances soon after the latter's United Front Government had assumed power at the Centre. In the letter, he made scathing attacks against the very crude and brusque manner by which Gowda had dismissed the various objections raised by several concerned citizens over this project, including those by the local people of Dakshina Kannada district and by environmentalists (Fernandes, 1996).

Basing his charges of corruption against Gowda on an analysis of the balance sheets of a TNC involved with the Cogentrix project (CLP), he clearly accused Gowda of being:

As the Hindu has reported:

The questionable role of Mr S Bangarappa in the Cogentrix-MPC affair has also been the subject of debate. As Chief Minister of the Congress led government, he had signed the Memorandum of Understanding (MOU) with Cogentrix. He had also made it publicly clear that 'he took strong exception to (any) objections against the 1000 MW power plant' (The Indian Express, 1996) and stated that such acts raised a needless hue and cry and directly opposed the interests of the state:'Objections and controversies would only affect efforts to attract foreign investment' (as cited byThe Indian Express, 1996). When he was removed from power due to a political shake-up and allegations of corruption during his rule, there was talk of reviewing the Cogentrix deal[ 17]. However, his successor from the Congress, Veerappa Moily, proceeded to sign the PPA with Cogentrix, claiming any re-negotiation would send wrong signals to foreign investors[ 18].

J H Patel has also been repeatedly criticised for his highly questionable support for the project, both as Power Minister of Karnataka when Deve Gowda was Chief Minister and major features of the deal were concluded, and later as Chief Minister, when he succeeded Deve Gowda. Parvathi Menon, for instance, has clearly implicated Patel in an expose of the way in which the CEA provided in principle clearance to the Cogentrix linked MPC project through questionable and corrupt, deep political means. According to Menon, the then Karnataka Power Minister, J H Patel, has conceded that clearance was, indeed, rushed through primarily as a consequence of clear pressure being exerted by the then State Chief Minister, Deve Gowda. The Chief Minister's political step[ 19] - which initiated such pressure - subsequently resulted in a clearance being granted through illegal, and clearly corrupt, deep political means (Menon, 1995, 118).

As The Times of India has confirmed, the Chief Minister did questionably attempt to pressurise the Environmental Clearance Committee (ECC) into passing the project irrespective of any concerns it might have:

The Hindu further confirms that the Chief Minister seemed to wish to disturbingly treat the ECC's deliberations as a mere 'formality, what with the Chief Minister ... himself indirectly bringing pressure on it by repeatedly mentioning that the environmental clearance to the project would be granted in a couple of days. The Chief Minister, who was in Singapore (on July 25th, 1995), made a similar statement even on Monday' (The Hindu, 1995c). When such pressure failed to effect the desired response, a cover-up/disinformation campaign was effected. It was falsely claimed that the ECC had passed the project. Clearances were then provided upon the basis of this falsehood[ 20].

As Menon clarifies:

To Menon, it is consequently difficult to ascribe any justifiable and above-board reasons for such stubborn and uncritical support for the project, despite mounting criticism and public concern (Menon, 1995). The Environment Support Group further notes that governmental support for Cogentrix's project continued through into the late 1990s, even after it was apparent, by the company's own accounts, that it was in debt to the tune of $ 1.5 billion[ 22].

5. Agarwal and Kantha – PIL and the Ensuing Judgement on Corrupt and Deep Political Interventions

Allegations of corruption were raised by Agarwal in a PIL before the High Court of Karnataka. Mr. S. K. Kantha, the Karnataka Chief of Fernandes' Samatha Party, backed these allegations. The Court admitted the same as a PIL in the manner of a Writ Petition No. 10696 of 1997(hereinafter cited as WP 1997). In an extensively argued judgement that exercised great care in detailing and analysing the controversial facts of the deal, the Bench held 'that the circumstances noted herein (the petition) cannot be termed to be frivolous, baseless, concocted or referred to (as) malafide'as the respondents had claimed, or used only for the purpose of defaming the respondent foreign company' (Agarwal vs. State, 173).

As the Justices explained:

The judgement, in fact commenced with an analysis of the repercussions of deep political processes and corruption on civil society:

The court concluded that it was 'satisfied that a prima facie case had been made out' by Agarwal which 'requir(ed) further probe and investigation for allaying the apprehensions conceived by the petitioners and other citizens' (Agarwal v State,174). On such a basis, the court ordered 'the respondent state' of Karnataka 'to get a FIR (First Investigation Report) registered with the CBI' towards initiating the process of investigation, 'for various cognisable offences without naming any person or group of persons as accused' (Agarwal v State, 177). Such investigation, the court felt, shall 'not be influenced by any of the observations made' by the court and shall 'be conducted by an Officer under the supervision and direct control of an official not below the rank of Deputy Director General of the CBI' (Agarwal v State, 177). The court directed that:

In arriving at its decision, the judgement had carefully sought to detail the way in which 'a seminar on power generation was held in India' in June 1992 in which Cogentrix was 'invited to attend' and officially 'introduced to the Government of Karnataka' (Agarwal v State,118).A month later, 'a draft MOU was submitted by Cogentrix' (Agarwal vs. State, 106). Within a fortnight and 'before getting the draft MOU examined, the state cabinet is alleged to have approved the entering into the MOU' with Cogentrix (Agarwal vs. State, 118).

The judgement established, beyond reasonable doubt, that this decision was also questionably undertaken without having issued any tenders internationally or nationally to other prospective power producers. By 30 July 1992, less than a month after the draft MOU was submitted by Cogentrix, it was noted that 'the MOU was entered with Cogentrix' (Agarwal vs. State, 107).

Petitioners Agarwal and Kantha, the judgement confirms, were of the opinion that 'everything was not well in arriving at a settlement' for the 4,200 crore rupee project[ 23], in which 'all efforts were made' - in violation of rules and norms associated with what is perceived to be the general interest (or public ethics) in society – 'to confer undue largess upon the said company at the altar of national interests. Various discrepancies' and irregular, deep political, secretive actions 'regarding the submission of the MOU, its approval and ratification' were clearly identified (Agarwal vs. State, 119, 120-124).

Chief Justice Sethi and Justice Gowda's judgement, drawing upon Agarwal and Kantha's concerns, additionally queried how 'the MOU could have been entered on 30 July, 1992', when a delegation led by then Karnataka Chief Minister S Bangarappa, that included the Secretary of the Energy Department, the Principal Secretary to the Chief Minister, the Director of the Industries and Commerce Department and the Resident Commissioner of Karnataka, was 'allegedly (still) contacting … foreign companies (overseas) and discussing with them their proposals and offers to construct, own and operate power plants in Karnataka' (Agarwal v State, 124).

Other questionable issues were also covered: On 10th August 1992, the Cabinet is stated to have been informed that an MOU had been signed with Cogentrix for two 250 MW power projects, at Bangalore and Mangalore respectively. This MOU is reported to have controversially enabled Cogentrix to enter co-sponsorship deals with other investors. Soon after, Mehta additionally notes, that 'the Government of Karnataka signed two MOUs with Cogentrix in the US for two plants' - now of the higher order of '500 MW capacity each at Mangalore and Bangalore respectively. In express violation of its own orders, the Government of Karnataka in the MOU with Cogentrix' again appeared to have 'allowed Cogentrix to bring in any partners they wished. Additionally, in another explicit violation of the Government of Karnataka's orders, the MOUs signed with Cogentrix were for two 500 MW projects. The government had only (formerly) sanctioned two projects of 250 MW capacity. These are not trivial errors. The additional 500 MW capacity would mean payments of Rs. 30,000 crore' (Mehta, 1999, 129).

With a new state government assuming office on 19 November 1992, an undertaking was made to review all MOUs in order to 'make sure that the selection of parties for the power projects was through adequate publicity, to ensure fair play and protect the good name of the administration' (Mehta, 1999, 130). However, as Mehta notes, 'these motives' and initiatives 'were given short shrift by specific officers of the central government' (Mehta, 1999, 130). On 3 March 1993, instead, another MOU was issued wherein a surprisingly much larger 1000 MW thermal plant at Mangalore (and promoted by Cogentrix) was approved and permitted. As noted in the verdict 'the circumstances under which the MOU was initiated, negotiated, settled and concluded are allegedly not free from doubt' (Agarwal v State, 131).

As Agarwal and Kantha have argued, the first questionable, deep political aspect of the MOU relates to the closed and secretive way in which Cogentrix was awarded the contract for the Rs. 4200 crore[ 24] project and accorded with a 'sovereign counter-guarantee', and this without recourse to any national or international tendering process or open public scrutiny. Shockingly, this deal was executed at a time when it was publicly known that the company had been clearly and actively engaged in:

According to Agarwal and Kantha, 'the selection of Cogentrix' by a clique of Indian politicians, through this questionable, closed tendering, liberalisation process 'was... with the oblique motive of finding out a party for the ulterior purpose of creating circumstances to facilitate the receipt of undue pecuniary gains at the costs of the national interests and its economy' (as quoted inAgarwal v State, 139). With documented evidence of bank transactions in British Virgin Island accounts of CLP, a Hong Kong based company that replaced General Electric as co-investor with Cogentrix in the MPC project, they argued that the liberalisation policy and strategy through which Cogentrix Inc/Energy was selected, resulted in a situation in which 'bribes' were paid, 'amounted to whole or part of Hong Kong $122 million in the year 1994-5 and Hong Kong $69 million in the year 1995-96' (WP 1997,2).

These bribes, in Agarwal and Kantha's opinion, were used to push through the highly questionable mega-project in Padubidri, Nandikur and surrounding villages (near Mangalore on Karnataka's west coast), at a time when it was being vigorously opposed on a number of ethical, cultural, human rights, environmental and economic grounds by local fishing and agricultural communities in the district, environmentalists, public interest and local community groups. As elucidated in their petition, Cogentrix, as part of its initiative to proceed with the tendering, financing and management of the mega-project, promoted and incorporated an Indian Company on 3rd March, 1994, called the Mangalore Power Company (MPC). MPC was to assume all legal responsibilities for the promoters of the project in the future.

Cogentrix and General Electric of the USA were presented in subsequent transactions as the joint partners, investors and co-sponsors of MPC when official approval for the 1000 MW mega-project was sought and gained from the Karnataka Electricity Board (via a PPA)[ 25] and the Karnataka State's Secretariat for Industrial Approval[ 26]. Yet, as Agarwal and Kantha reveal, this company, which incredibly sought and obtained these requisite approvals for a Rs. 4200 crore mega-project with a paid up capital of only Rs 2000/- (a highly questionable issue in itself - a sum of less than UK£30 at 1999 exchange rates), apparently did so in a highly deceptive manner (WP 1997).

Although General Electric had been named as a co-sponsor and arrangement partner of Cogentrix in MPC - in order to secure the PPA and other agreements and official approvals -

As Agarwal and Kantha clarify, such actions and declarations are clearly and legally of a corrupt nature. Under Sections 4 of the Companies Act MPC could not be described as (General Electric's) subsidiary company (WP 1997). Chief Justice Sethi and Justice Gowda, in evaluating the basis of these contentions, confirmed in their High Court judgement that 'the(se) allegations (of corruption and deep political processes) made by the petitioners in this regard cannot be held to be either imaginary or concocted, or motivated or devoid of any substance' (Agarwal v State, 139).

Further scandals were outlined in the petition: The Government of Karnataka would appear to have entered into an agreement with Cogentrix to proceed with the mega-project during 1993 - via MPC - even at a time when it was 'not a listed company even in the USA and had no balance sheet'[ 27]. Moreover, the Government appears to have proceeded with its dealings with Cogentrix, and its aggressive endorsement, encouragement and promotion of the MPC project[ 28], in spite of the following situation.

To Agarwal and Kantha, the above facts clearly indicated that politicians acting on behalf of the Government of Karnataka - by seeking to nevertheless continue providing Cogentrix (via MPC) with MOUs and resources of access and influence which were far superior to those which would normally have been available to other companies in the course of open dealings - were clearly engaged in corrupt and deep political dealings and receiving kickbacks.

The petition, equally disturbingly, documented the way in which the Government ignored the advice of its own consulting team, which recommended against signing the PPA with MPC due to clear irregularities: '(T)he Government of Karnataka in 1994 commissioned a (SAIC) study to review the PPA for the Mangalore Power Project. The consulting team comprised of GOPA (Germany), SAIC (Science Application International Centre) of USA and TERI (Tata Energy Research Institute) of India. The very commissioning of a team of experts to review the PPA of MPC at a sizeable cost to the Exchequer[ 29] shows that neither the Government of Karnataka nor the KEB (Karnataka Electricity Board) possessed the expertise to negotiate the PPA. Nor were (they) in a position to apply their mind ...It is significant to note that the report was never made public' once it became apparent that it had expressed severe concerns over the nature of the PPA. Nor were the recommendations and findings of these independent experts taken on board. These governmental actions, Mehta concludes, are questionable when one realises that 'the central government … in January 1994 … made it a pre-condition to have the PPA vetted - i.e. approved - by this very team of 'independent experts for issue of sovereign guarantee for the obligations of the state electricity board' (Mehta, 1999, 131).

According to Ranganathan and Mehta, the SAIC reports' main findings suggested that incentives for cost minimisation in the PPA were distressingly absent. Most of the terms of the PPA, moreover, were clearly one-sided, unduly favouring MPC:

Such was the fear over the implications of such a critique, that the Government, through deep political actions, suppressed an 'occasional good work ... by resorting to a thick veil of secrecy'[ 30] (Ranganathan, 1997, 64). As Agarwal and Kantha confirm:

These revelations would appear to directly challenge Ron Somers' contention that there was nothing 'hanky panky' about the signing of the draft PPA, as it was conducted in a 'transparent' fashion which 'could be a role model' for other PPAs (As cited byThe Hindu, 1995e).

Agarwal and Kantha's petition also drew attention to the following deep political and corrupt actions which were 'suggestive of kickbacks, payoffs and bribes which are offences under our laws' (WP 1997, 29):

It was upon the basis of these well documented arguments and allegations of corruption by the petitioners that the High Court held that there were reasons which were significant enough to require further probe and investigation by an officer not below the rank of Deputy Director General of the CBI (Agarwal v State). All parties referred to in the corruption petition, inclusive of the Central Government and the State Government concerned, were to furnish all necessary information to the investigating agency. Cogentrix, Arthur Anderson, General Electric and CLP were all requested to render all possible assistance in the completion of the investigation by the High Court (Agarwal v State, 177).

However, as Saldanha, Fernandes and Mathai have observed, the Government of Karnataka, rather than complying with the High Court's 'order (Agarwal vs. State) to uphold the public interest and herald a process of transparency in decisions relating to this project in a critical sector as energy development ...prefereed an appeal against the judgement in the Supreme Court of India. It claimed that such actions (i.e the CBI probe) would scare away investors' (Saldanha et al, 2000,12). Karnataka's then Law Minister, M C Nanaiah, also claimed that the Court had no jurisdiction to issue such an order as 'it is the prerogative and special provision of the state government (alone) to accord permission for a CBI probe' (Indian Express, March 1998). Agarwal and Kantha, for their part, strongly contested the basis of the government's defence in their own Special Leave Petition before the Supreme Court of India. They also filed several rejoinder statements[ 32].

6. Appeal to the Supreme Court

The Supreme Court Bench, led by then Chief Justice M M Punchi, stayed the High Court verdict on 3 April 1998. A Supreme Court judgement was made on 13 December 1999, by Justices Saghir Ahmad and Rajendra Babu. Controversially, the Business Standard notes that 'details of the judgement could not ascertained', initially, 'as the copy ha(d) not been released by the Court' (Business Standard, 1999, 1). The judgement, when it was pronounced, was greeted with dismay in some quarters. It - naively and controversially to some - sought to strangely argue that 'it (wa)s difficult', at the outset, to even begin 'to visualise that when an agreement had been entered into with a foreign company, it has been done under suspicious circumstances' (State of Karnataka vs. Arun Kumar Agarwal 1999SOL Case No. 735)[33].

Such naivete is truly startling, given the rash of public exposes over the past few years - from Bofors and Sukh Ram to GEC Alshom - , which have clearly detailed tons of corrupt transactions between 'foreign companies' and Indian government departments and politicians from differing political parties. S S Gill's (1998) book, The Pathology of Corruption, for instance, details a whole range of such suspicious and corrupt, deep political actions[ 34]. The Supreme Court judgement further stated that the concept - of there being any 'suspicious circumstances' in an agreement with a foreign company – was even more difficult to fathom 'when it (i.e. the project proposal) had stood the test of scrutiny under three different governments headed by at least three different Chief Ministers' (State v Agarwal). The judgement then, controversially to some, challenged and overturned the High Court's previous orders and opinions on the grounds that:

In commenting on this judgement, Saldanha, Fernandes and Mathai note that 'the High Court had argued its judgement over 178 pages, and the Supreme Court's overruling of the same consisted of 11 pages. Ten of those included reporting of proceedings' (Saldanha et al, 2000, 17). Arun Agarwal, on hearing of the decision, also refused to let matters rest:

Karnataka Chief Minister S.M. Krishna's perspectives on the matter were altogether different:

To Ron Somers, MD of MPC:

MPC, in a press statement, noted that the verdict:

Strikingly, one notes that the Supreme Court verdict was pronounced the weekend after Cogentrix had formally announced its decision to pull out of the MPC project, claiming protracted delays as its reason (Cogentrix, 1999).

7. Sabhapathy's Allegations of Corruption Involving MPC and Cogentrix'

Even as MPC and Cogentrix have sought to publicise the fact that the Supreme Court judgement has exonerated them from any charges of corruption, evidence from other quarters has, yet again, challenged their view that the project and its clearance has been 'as clean as a whistle from the corruption angle' (Deccan Herald, 1996a). The investigative journalist BV Seetharam revealed in an article for The Canara Times on 23rd April 2000:

Despite such evidence and a request for a CBI probe, it is disquieting to note that no action has been taken by the authorities to date.

8. Further Deep Political Concerns over the MPC Project

From the time Cogentrix had proposed to locate its power plant at Nandikur in coastal Dakshina Kannada region, several critical concerns have been raised with regard to the social and environmental impacts of the project. Janajagriti Samithi of Nandikur, a committee of project affected persons, has been resisting the location of power plants in the district for over a decade now[ 35]. It has made hundreds of representations to various ministries of the Government and raised critical concerns over the social, economic and environmental impacts of thermal power projects. All along, its concerns have been backed by a number of extensive and authoritative research findings. Despite these documented concerns and civic and legal appeals, the government would appear to have chosen to ignore them by attempting to 'push the project through, come what may (through an) extremely speedy environmental clearance, granted by the Ministry of Environment, within days of Mr Deve Gowda's government taking oath at the Centre in June 1996' (Saldanha, 1999, 5).

It is necessary at this point, however, to detail just how ethically, legally and operationally problematic the MPC liberalisation project is in many ways, and how questionably it has been promoted through deep political and/or corrupt means. As Saldanha and others have clearly shown:

It is important to appreciate that these highly irregular clearances which favoured Cogentrix/MPC were brought to the notice of High Court of Karnataka through a PIL by Janajagriti Samithi (Writ Petition No. 28651 of 1996)[ 38]. Even as this petition was being considered in preliminary hearings in the High Court, Maneka Gandhi filed an interlocutory application in the PIL of the Indian Council for Enviro-Legal Action pending before the Supreme Court (I.A.21 of 1996 in W.P. (Civil) No. 664/1993). This petition, which focused essentially on the Cogentrix backed MPC project violations in the Central Coastal Regulation Zone (CRZ), alleged that:

On the basis of the ICELA-Gandhi petitions, the Supreme Court Bench consisting of Mr. Justice Kuldip Singh and Mr. Justice Saghir Ahmed ordered a review of the Cogentrix project, along with other similar coastal projects. It was to be conducted by the National Environmental Engineering Research Institute (NEERI). As the Supreme Court Bench had requested, this was to examine the 'viability of the project from an environmental point of view which was based on the principle of sustainable development'. The Supreme Court also recommended visits to the project area were to be undertaken and 'conformity of the project with various Notifications issued by the Government of India regarding Coastal Zone Regulation'was to be assessed critically to determine whether corrupt and/or deep political, irregular actions had been undertaken.

9. The Findings of the Neeri Report

Following an extensive process of investigation by an interdisciplinary team of experts, which involved site inspection, interactions with the State Government, company officials, project affected communities and local civil society groups, NEERI submitted its report to the Supreme Court. The report - which was highly critical of the irregular and undemocratic way in which environmental clearances for the project had been granted -questioned the very environmental viability of the project and warned that it would be disastrous to carry on with the project in the region (NEERI, 1996).

The NEERI report critically observed that:

Other significant findings and conclusions which are of relevance to this study were made:

Regarding the process of granting environmental clearances in general, NEERI distressingly concluded in its report that:

Such glaring omissions, distortions, compromises, and lack of verification and judgement in considering the social, environmental and regional impacts of the project, as revealed by NEERI, is a shocking revelation of the extent to which MPC and the Ministry seem to have compromised critical public interest, environmental and welfare concerns on deep political grounds to favour the project. Certainly, for an agency that is supposed to be charged with championing critical public interest and welfare/environmental concerns, such poor quality decisions by MOEF have been viewed with suspicion by several commentators and public interest groups. Janajagriti Samithi would appear to be one such group which, in its petition before the High Court, had concluded that the:

The NEERI report, interestingly enough, not only endorsed this statement in full, but also revealed further the grossness of the lacunae involved in the decision making process.

10. Deep Politics and the Ministry of Environment and Forests

To gain a deeper understanding of the circumstances that may have compelled the MOEF to arrive at such a controversial decision, the second author met with Dr Nalini Bhat (Additional Director, Environmental Clearances) in the MOEF, soon after clearance was granted. Expectedly, Dr Bhat refused to comment on any aspect of the clearance concerning the Cogentrix project. However, she did admit that such glaring lacunae could and should not be repeated for subsequent project(s). In conceding this point, Dr Bhat arguably seemed to be admitting that the MOEF did clear the project in questionable circumstances.

Concerning the nature of the deep political system in India and the corrupt actions of the MOEF, Bittu Sahgal, Editor of Sanctuary Magazine and an expert advisor to MOEF, has observed that:

11. Deep Politics, The Targeting of 'Opponents'of the MPC Project, and the Suppression of Local Rights

Repressive deep political actions have also been effected in order to secure the MPC project. The intolerant attitude that the Government developed in defending the deal reached such an extent that it began to cost honest bureaucrats their jobs. A well- documented instance is that of Mr A N Yellappa Reddy, a widely respected senior Indian Forest Service officer who, as Special Secretary of the Karnataka State Ecology, Environment and Forest Department, had raised documented concerns relating to the environmental and public health risks posed by the Cogentrix/MPC project. For this, he was pressurised into resigning from his post, with the then Chief Minister of Karnataka, Deve Gowda, even threatening to sack him by issuing him with a 'show cause notice' for refusing to withdraw his criticisms.

Unable to tolerate the pressure, Reddy resigned and explained his reasons for this in a Press Conference that he called on 12th November, 1995. During the Press Conference, he revealed that he had decided to 'voluntarily resign'when the Cogentrix/MPC environmental clearance had been obtained by the State Government from the KSPCB, 'overriding' the recommendations of the ECC which he had headed (The Hindu, 1995d). 'Issuing clarifications and justifying his opinion on the environmental aspects of the Cogentrix project at a technical seminar did not amount to betraying the Government's confidence', he had reasoned (The Hindu, 1995d).

Similarly, academics have also been intimidated for daring to criticise or publicly debate several controversial aspects of the Cogentrix-MPC project. Professor Pattabhirama Somayaji of Mangalore University, to take one example, was suspended for his comments concerning the Cogentrix project and for protesting:

Smear campaigns were conducted against him. As Somayaji had stated at the time, it was

Although Somayaji was later reinstated, following widespread criticism of the decision, there have been further threats to his freedom of expression. As Prof. Narahari, President of Mangalore University College Teachers Union has confirmed, Somayaji, along with colleague Prof. Jogan Shankar, have continued to be constantly 'questioned' by the police on their daily schedule:

The Deccan Herald further notes that Prof. Narahari, 'strongly condemning the police encroachment on university jurisdiction … wondered how police could enter the campus without the permission or 'invitation' of the Vice-Chancellor. He also alleged that Professor Somayaji had (through deep political intervention) been transferred to the (under-graduate) degree college in Madikeri (of neighbouring Kodagu district) from the postgraduate department of Mangalore University for vindictive reasons… Professor Shankar, who was present at the meeting, stood up to say that his family had been terrorised by the frequent visits and enquiries by the police who didn't even have a written complaint by anybody. The police only…went on asking the wherabouts of Professor Somayaji' (Deccan Herald News Service, 1998).

The suppression of local rights and the deliberate distortion of democratic control by duly elected bodies has also occurred:

Further repressive actions have been documented:

When sections of the project affected communities discovered that the State Government was overruling panchayat resolutions and initiating forced land acquisition proceedings against them in order to set up a rehabilitation colony for the MPC project, they expressed their opposition towards plans to fence over 70 acres of Kumki land (village grazing pastures) for this purpose. These communities suddenly found themselves facing

As the Environment Support Group has distressingly concluded, liberalisation, tied as it is to the wider deep political structure in India, is increasingly beginning to serve the interests of TNCs, corrupt bureaucracies and local elites who believe more in the:

12. Deep Politics and the Involvement of US Government Favouring MPC

MPC has also been charged by ESG and Janajagriti Samithi of Udupi of acting in a deep political and corrupt manner:

In Saldanha, Fernandes and Mathai's opinion, local democratic control has been subverted through the deep political actions of Cogentrix and MPC:

Reports from the Hindu clarify that intense US government support and lobbying activity was, indeed, extended in order to push through the Cogentrix/MPC project: The late Ron Brown, US Commerce Secretary, for example, had actively campaigned for the Cogentrix venture whilst on an official visit to India, claiming the company to be a model venture of 'Indo-US co-operation' (The Hindu, 1995b). George Lewis, chairman and CEO of Cogentrix, accompanied Secretary of Commerce, Ronald Brown, on a trade mission to India in January 1995, and it was at a time when Cogentrix was negotiating its $1.4 billion deal. During this visit, Bangalore was his second stop, and his only main appointment was with Deve Gowda, who was then Chief Minister of Karnataka[ 40]. At a joint press conference addressed by Gowda, Brown and Lewis, Gowda, seeking to respond to Brown's concerns, gave him 'positive and specific'assurances that his Government would promote Cogentrix by clearing fast the procedural formalities so that the people could benefit from the 'efficient power (of Cogentrix) as soon as possible' (The Hindu, 1995b).

As Charles Smith has revealed, there are disquieting trends which need to be understood concerning the way in which the US government has often sought to secure, lobby and campaign for power station deals in Asia which favour particular US backed power utilities. A few months prior to Ron Brown's visit to Deve Gowda to promote and lobby for the Cogentrix/MPC project, for instance, he had personally travelled with US President Bill Clinton to the Asia Pacific Economic Conference in Indonesia where Clinton had lobbied for, and secured, a two billion dollar deal for a US backed power project. This had been secured through a $ 15 million 'free gift', or bribe (effectively 0.75% ownership of the US backed project) to President Suharto's daughter, which had been obtained through the use of US taxpayers'money. (The total formal kickback to Suharto's relatives, notes Smith, amounted to $ US 50 million). In return for these kickbacks, we are told, 'the Indonesian dictator selected (US) companies owned by major Clinton donors to build the Paiton power plant in East Java' (Smith, 1999, 1).

Such disturbing deep political, corrupt trends have made some commentators privately and publicly wonder what precise secretive inducements might have been offered - if at all - during the Ron Brown visit to Deve Gowda. A lack of public access to minutes of closed meetings between Ron Brown, the CEO of Cogentrix and Deve Gowda, or to the bank accounts of Deve Gowda (which could possibly have been accessed had a CBI probe been ordered) means that one can only speculate on such matters at this moment in time.

13. Deep Politics and the Use of a Flawed Report and REIA

A highly inaccurate and flawed Environmental Impact Statement (EIS) by Dr Chockalingam, the Head of the Department of Civil Engineering at Annamalai University, was questionably used by MPC and various regulatory authorities to justify the siting of the project in the ecologically sensitive region of Dakshina Kannada. The EIS was originally produced in order to more carefully 'evaluate' the social and environmental viability of a proposed 2,000 MW coal based thermal power plant, which was to be developed in 1988 over six stages, by the state owned Karnataka Power Corporation Ltd. (KPCL). In the report, Chockalingam had described the villages of Nandikur, Padubidri, Nadsal, Yellur, Padebettu, as appropriate for the location of power plants due to the fact that these areas were 'mostly barren'and 'degraded, marshy, undulating and uncultivable' (Saldanha et al, 2000, 27). This project was abandoned as KPCL was unable to raise the appropriate finances. The findings of the Chockalingam EIS/Report, however, have continued to be used by authorities and power project promoters (including MPC/Cogentrix) to questionably justify the clearances of other power projects in the region.

The veracity of the Chockalingam report, for instance, was strongly contested by Janajagriti Samithi in its MPC-Cogentrix project linked petition (WP 1996). This stated that the allegedly barren and degraded, marshy, undulating and uncultivable lands which were to form the project site were so fertile that:

Furthermore, the petition highlighted that 'there are a large number of higher primary and secondary schools and a few colleges in the area' under acquisition (WP 1996, 44, 45).

To substantiate their objections to the Chockalingam EIS findings, Janajagriti Samithi, backed by Environment Support Group (ESG), requested scientists from Centre for Ecological Sciences at the Indian Institute of Science (IIS) to conduct a ground verification based land use survey of the proposed site, and to also use satellite imagery to further clarify issues. This study, which was conducted in early 1997, confirmed that:

This report, which clearly exposed the bogus 'findings'of the Chockalingam EIS, was submitted to the Court to scientifically verify the claims of the petitioners (John and Suresh, 1997, 3).

In the same manner, another scientific study was commissioned by Janajagriti Samithi to review the findings of the REIA which had been prepared by Tata Consultancy Services for MPC. This REIA had, controversially, earlier been used by MPC to justify and obtain final environmental clearances for its project. Sagar Dhara, the author of this review of the REIA, had already conducted a Comprehensive Environment Impact Assessment for the NTPC project, precursor to the Cogentrix project, and was thus very familiar with the ecological, geographical, demographic and socio-economic features of the region (Dhara, 1997).

Dhara's report made some startling revelations. First and foremost, it revealed that there were critical problems with the meteorological input data, which had been used in the REIA, for air quality modelling to prove beyond reasonable doubt that the project would have no significant air pollution impact (Dhara, 1997). Dhara's report exposed the way in which the Tata-Cogentrix-MPC report had clearly, consciously and scandalously, fudged critical meteorological data - through its use of a French firm, Transoft - to falsely conclude that air pollution levels in the region were much lower than they actually were. The consequences of such dangerous distortion, Dhara explained, could be quite serious to the health of the local population, and could result in respiratory tract ailments such as increased incidence of chronic bronchitis, asthma and some eye ailments as well (Dhara, 1997).

To Dhara, the MPC REIA report had, equally disturbingly:

The Dhara report also detailed the way in which, more often than not, critical data on significant health and environmental impacts was suppressed or even distorted in order to present a least-impact or no-impact scenario. This, from the REIA of a company (MPC) which publicly claims that it is 'dedicated to environmentally safe power project development (sic)'(MPC, undated, 1). It was pointed out, for instance, that the:

Despite such a situation, the:

Furthermore, 'quantities and characteristics of solid wastes to be generated by the FGD[ 41], and desalination plant[ 42] and the method of their disposal, have not been provided in the MPC REIA' (Dhara, 1997, 12-15). 'The wind data used by Cogentrix's consultants for predicting the post-plant ambient air quality (AAQ) was inappropriate ... The possibility of mercury pollution, which occurs when large amounts of coal is burnt, was ignored by Cogentrix's consultants. Mercury pollution has happened at the Singrauli area, which has several power plants' (Dhara, 2000, 221).

These shortcomings clearly indicated that that there was a 'need for reviewing MPC's environmental clearance in a broader context (as the MPC REIA, beyond providing inaccurate, and even distorted, estimates of the environmental and social impacts, deliberately) d(id) not attempt to understand the broader dimensions of the proposed rapid industrialisation of the Mangalore-Udupi belt and the impact it will have on the environment' (Dhara, 1997).

Dhara's conclusions are worth reflecting upon:

Whilst the Dhara and IIS reports dealt specifically with regard to the impact of the proposed MPC project and were both initiated by the petitioners, the Karnataka Department of Environment had been deeply concerned with the mega-industrialisation of the Dakshina Kannada region. With technical and financial assistance from the Danish International Development Agency (DANIDA), a four year long research exercise had been initiated at a cost of Rs. 20 crores. This had resulted in the preparation of an 'Environmental Master Plan Study for the Dakshina Kannada District'.

Popularly referred to as the 'DANIDA report', this study conducted an exhaustive review of the social and environmental characteristics of the district and prescribed a paradigm of development that was in keeping with the natural resource base and in securing appropriate land use development. In view of this report, a key sponsor for which was the Government of Karnataka, the location of the Cogentrix power plant seemed to clearly fly in the face of the study's prescriptions, and also appeared to belittle all concerns expressed against locating such projects in this ecologically fragile region. The findings of this study, too, were produced in court to highlight the way in which the Government had strangely acted against its own study recommendations in order to push through the MPC project.

Even as these studies, by themselves, argued strongly against locating the MPC venture in the Dakshina Kannada region, petitioners did not rest in exposing further deep political and corrupt processes at work in defeating the public cause and promoting MPC's interests. A confidential letter written by Ron Somers, MD of MPC to the Member Secretary of the KSPCB, was made public. It clearly revealed that MPC was not interested in complying with the conditions which it was obliged to follow after its clearance had been granted.

In this letter, dated 20 January 1997, Somers clearly stated that MPC had planned for a 'comprehensive EIA'of the project. However, it was to only be conducted after June 1997, after site control had been gained (Somers, 1997). Such a proposal, which 'is utterly contemptuous of (the) law' (Saldanha et al, 2000, 25), clearly violates the fundamental premise of the Environmental Impact Assessment Notification on the basis of which the controversial environmental clearance was granted to MPC.

The EIA Notification[ 43], for instance, essentially argues that environmental and social impacts should be assessed, and necessary controls adopted, before inception of a project. Any violation of conditions imposed is to be seriously considered, and revocation of clearances is to be effected. The relevant regulatory body, as Saldanha, Fernandes and Mathai clarify, should - upon receiving this letter - have actually, in above board circumstances, 'have immediately cancelled the clearance accorded and initiated contempt proceedings against MPC in safeguarding public interest. Rather, this letter was suppressed' in order to continue to favour the MPC project proposal and clearance continued to be granted (Saldanha et al, 2000, 28).

The letter, equally disturbingly, reveals that Somers was aware that coal could not be unloaded from ships onto barges during the four monsoon months due to rough seas. MPC's official position, however, had stated that there would be no such problem. This revelation confirmed the basis of the petitioners' concerns. The petitioners had estimated that 2.1 million tonnes of coal were liable to be stored to offset this problem during the monsoon period. As a result of this problem - which the public was not notified of officially - it was also likely that MPC could exploit the situation in an under-hand manner to claim reimbursement costs for power not generated under the 'deemed generation' clause included in the PPA. Equally distressingly, it was possible under these circumstances for MPC to demand much more land for project development. To Janagrithi Samithi, such a policy could further impact upon the livelihoods of the local people, and also result in the further destruction of the ecologically sensitive region (WP, 1996).

14. Deep Politics, The Repercussions of the NEERI Report and Suppression of Petitioners Right to Information

Keeping in view NEERI's strong criticisms, and rejection even, of the environmental clearances granted to the MPC project, the Supreme Court was of the view that 'this matter can be better dealt with at the High Court level (and directed the Court to) treat these matters as petition under Article 226 of the Constitution of India'along with the pending petition of Janajagriti Samithi[ 44]. The Supreme Court further gave liberty to the parties to file further affidavits/documents in the High Court.

The blow that the NEERI report had delivered to the project and to the credibility of the various institutions which accorded clearances was so very severe, that the respondents, including the MOEF, KSPCB, the Karnataka Environment Department and, expectedly, MPC, were quick to vigorously denounce the findings[ 45]. The rush to excuse themselves from irregularities which had been detailed by NEERI was such that glaring contradictions emerged in the statements they filed in the High Court on the very same facts. While the KSPCB, for instance, finally admitted the Janajagriti Samithi position that public hearings had, indeed, not been held before clearance was accorded, the MOEF had still attempted to evade this position. This, even after the due regulatory agency to hold the public hearing, the KSPCB, had conceded the argument.

In view of such contradictory statements made by the regulatory agencies, the petitioners, Janajagriti Samithi, together with Maneka Gandhi, pressed the High Court to make official documents which related to the granting of clearances publicly accessible for inspection. The High Court conceded this demand, somewhat reluctantly, and directed the respondents to provide the petitioners with requested documents in an interim order. However, 'weeks turned to months and none of the documents requested were provided by any of the respondents. Mischievously, Dua Associates, legal advisors to MPC, offered (only) to provide such documents that were already part of the petition. This was brought to the notice of the Court but no specific action was taken (Saldanha, 1998, 9).

When '(t)hree months after seeking the documents, they were still not produced, even as the High Court referred the matter for final hearings', the senior counsel appearing for Janajagriti Samithi, Mr R N Narasimha Murthy, formerly Advocate General of Karnataka state, 'raised serious concerns over the lack of information and made forceful appeals for the same. Constrained (further) by the lack of response from the respondent (and even the Court for not ordering the respondents to comply with its direction, Mr. Murthy) made a written submission that, given the failure of the respondents to produce the relevant information based on judicial direction, the arguments (could not) be advanced' any further than they had already been in the petition (Saldanha, 1998, 9, see also the memo filed by Janajagriti Samithi in this regard in the High Court on 31st March 1997).

When this stated position failed to elicit the desired response, the well-known environmental lawyer, M. C. Mehta, appearing for Maneka Gandhi, expressed his complete 'lack of confidence in the manner in which the Court dispensed justice' when it was dealing with the MPC-Cogentrix affair (Saldanha, 1998, 9). Initially, the Bench threatened to 'throw the case out and even ordered the petitioners counsels to file appropriate application seeking transfer to another Bench[ 46]. However, even before (the necessary transfer papers) could be filed (the Chief Justice Mr R P Sethi, by an administrative order) decided that the same Bench would continue to hear the case' (Saldanha, 1998, 9)[ 47]. The hearings proceeded on this basis, even as the petitioners were constrained by a lack of transparency on the part of the respondents and the court failed to ensure that the respondents furnished information which they were obliged to part with.

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