Dear Friends,
The Anti-ADB loan campaign committee has filed a legal notice to the
Kerala Government citing several violations in the signing of the ADB
urban loan. The legal notice was filed yesterday (24 February 2007)
and is pasted below for your reference.
The Peoples Forum Against ADB Press Conference will be held at 11.15am
at the Thiruvanathapuram Press Club on 27 February 2007.
A statewide convention against the ADB will be held in Ernakulam on 3
March 2007. This will be organised by the Anti ADB Campaign committee.
Justice VR Krishna Iyer, NBA activist Medha Patkar and writer Sara
Joseph are among those who will address the meeting.
Time: 10am onwards
Where: Ernakulam Ashir Bhavan (near Kacheripady)
Ernakulam.
Warm regards,
Benny
LEGAL NOTICE
To
1. The Chief Secretary
State of Kerala,
Government Secretariat, Thiruvananthapuram
2. Sri. Paloli Mohamed Kutty
Hon'ble Minister for Local Self Government and
Rural Development
State of Kerala, Thiruvananthapuram
3. Dr. Issac Thomas,
Hon'ble Minister for Finance.
State of Kerala, Thiruvananthapuram
4. Secretary to Government of India,
Department of Economic Affairs,
Ministry of Finance, North Block, New Delhi
5. The President,
Asian Development Bank,
P.O. Box 789,
0980, Manila Philippines
As per instructions from my clients (1) C.R. Neelakandan
Namboodhiri, S/o. Raman Namboodhiri, 'Thanal' Thrikkakara, Cochin-21,
Convenor, Anti-ADB Loan Campaign Committee, which is formed by eminent
personalities from different walks of life and chaired by Smt. Sarah
Joseph. (2) V.P. Vasudevan, S/o. late Gopalan Nair, 'Sooryakanthi',
Kunnakkavu, Perinthalmanna, Malappuram District, I effect with this
notice for your immediate attention and strict compliance.
My clients came to know through the media, that a formal
loan agreement was signed on 8th December 2006, between the Government
of India and Asian Development Bank (ADB) for availing a loan from the
said Bank and a project agreement was signed on behalf of the State of
Kerala and ADB for the purpose of developing the urban areas of the
State of Kerala. From the evaluation of the loan agreement and project
agreement my clients observed that the Government is borrowing an
amount of $ 221.2 Million from ADB and the period of utilisation is
until June 2012. My clients further inform:
1. Before signing such a formal contract with an out-country agency,
neither the State Government or the Central Government have not
disclosed the exact terms and conditions of the contract and the
implication of the agreement to the general public, either by
publishing the same in the media or by putting it in your official
website. As such there is absolutely no transparency to the public
about the pros and cons of the agreement and especially the repayment
burden put on their shoulders. Here, it is all the more important to
note that in the agreement no mention is made about the exact rate of
interest imposed on the borrower, except some vague technical jargon
like 0.6% of LIBOR.
2. My clients also revealed that, the Hon'ble Chief Minister
of Kerala himself disclosed before the media that he is not aware of
the signing of such an agreement and also the matter was not placed
before the Cabinet for discussions and there were no deliberations to
arrive at a conscientious decision.
3. My client further says that as on today, our State is
indebted for more than Rs.57, 000 Crores to various agencies, which is
a huge burden not only to the present generation but a curse for
future generations too. Each citizen is accountable and liable to
repay this debt amount. It is a matter to be pondered for a while,
before we borrow such a huge amount from an out-country agency an arm
of the World Bank by even mortgaging our very right to existence,
whether we can avoid this imminent borrowing. Before signing the
formal agreement, either the concerned Minister or the concerned
representative of the Government have not taken the general public
into confidence for the need of such a loan, the utilization and the
responsibility of repaying the same.
4. It is understood from the document 'Report and
Recommendations to the President of the Board of Directors' (RRP) of
ADB, that the amount will be repaid by the borrower as a general
condition. But at the same time it is pointed out in the same document
that Government should take appropriate action to collect levy from
the public who is the beneficiary of the developments. It is also
further imposed a condition therein, that the Government of Kerala
should ensure that the Corporations and Municipalities allocate
counter part funds from their annual budget to meet the requirement of
the project. It is also required to instruct the Municipalities and
Corporations to pass resolutions by March 2008 to introduce additional
taxes like service charge, user's fee etc. for revenue mobilization
for the funds needed for expansion of water supply, sewerage and solid
waste management etc. There are various other insistences also to the
State Government in the RRP such as ensuring Consultancy services,
justified by ADB and various other project implementation methods
subject to the satisfaction of the ADB.
5. My client further says that it is highly regrettable that
before signing such an agreement Government had not taken any pain to
place the matter before the House of Legislature for a detailed
deliberations and decision. If the matter had been placed before the
Legislature for deliberations, the general public might have got a
clear picture about the nature of the loan and method of repayment and
other related matter but the same did not happen. Whereas the Hon'ble
Minister for Local Self Government justified this, due to lack of time
and utmost urgency for signing the agreement, the Minister was
constrained to by-pass the established procedure to be adopted for
signing the contract. But the reality of facts is contrary this
position. The discussion for availing the loan from ADB was initiated
from January 2005 and almost completed in November 2005. From the
above it is very clear that there was sufficient time at disposal, but
due to utmost negligence and indifferent attitude of the concerned
authorities, the established formalities were not complied.
6. My clients further state that it is an accepted principle
that only the Governor of Kerala or any official duly authorised by
him can sign on behalf of the State of Kerala. The Governor is
discharging the constitutional functions as per the advice of the
Council of Ministers as the functionary in the State. In a cabinet
system of Government the Council of Ministers can take policy
decisions, which should be placed, before the House of Legislation for
discussions and decisions. Only then can the Governor enter into a
contract with either any Government outside the Country or with any
International agency. Without complying such formality no other person
has a right, morally and legally, to sign a contract with an
International agency on behalf of the State. Whereas the Project
Agreement was signed by the Resident Commissioner on behalf of State
of Kerala without any authority and without authorisation of the
Governor of Kerala.
7. My clients further says that if the Government is
bonafidely in need of financial assistance for the sustainable
development of urban areas in the State, it should have tried some
alternate source of availing the funds from the State itself by way of
loans from the Nationalised/Scheduled Banks, Co-operative Sector or
from Non-Resident Keralites etc who are capable of extending the same,
by offering reasonable interest and assurance of repayment, rather
than mortgaging the whole generation indebted to an outside
International Agency. By accepting the loan from an International
agency like ADB, we will be obliged to appoint multinational
consultancy companies as per the wishes of the ADB, which will degrade
the morale of the local professionals who have been undertaking such
responsibilities for quite long time.
8. My client further says that in recent press conferences,
the Hon'ble Minster Local Administration and Hon'ble Minster for
Finance were trying to mislead the general public by purposefully
suppressing the real facts about the loan. For example the Ministers
disclosed that RRP is only an internal document of ADB and the
Government of Kerala is answerable and accountable only to the terms
and conditions enumerated in the Loan Agreement and Project Agreement.
This disclosure is not correct and contrary to the real facts. From
the loan agreement it is very clear that RRP is an integral part of
the Agreement. Similarly, Hon'ble Minister for Local Self Government
issued a statement on 20-2-2007 to the media justifying the reason for
accepting the loan from ADB. From his statement it is noticed that the
responsibility to repay this amount is vested with the State
Government whereas, as per the agreement it is the responsibility of
the Municipal Corporations by levying the people, additional taxes in
return to availing the benefit of development. It is also claimed in
the statement that any conditions, which are detrimental to the
general public, have been deleted from the agreement before signing.
This is incorrect and contrary to the facts. By way of making this
statement, whether knowingly or unknowingly, the Ministers are trying
to mislead the public by suppressing the real facts.
9. As per the agreement terms, Government of Kerala should
permit ADB to evaluate the financial conditions of the State and to
check the expenditure details to assess the actual financial position
of the State as well as Corporations and Municipalities of Kerala. If
this demand is acceded to i.e. diverging the administrative facts and
internal matters of the State to a foreign agency, it will be in
effect violation of the oath of secrecy taken by Hon'ble Ministers.
Without disclosing the real facts and circumstances of the issue to
the general public before signing the agreement is amounts to a
violation of the oath taken by the Ministers in this regard.
10. Subsequent to 74th amendment of Constitution, Local Self
Government System was adopted in our country for the overall
grassroots development which was the long cherished dream of our
Father of the Nation. Whereas entering into such a contract is
undermining the powers of local self Governments and thereby
circumventing the Constitutional mandate.
Therefore my clients inform that the agreement entered
into with the Asian Development Bank by the State on 8th December 2006
is illegal, invalid and without any authority of law and hence need to
be declared as null and void. My clients also says that Government
should disclose the exact terms and conditions of the contract for the
knowledge of the general public and also all the details should be
placed before the house of Legislature for detailed deliberations and
then only the formal contract can be signed with the Asian Development
Bank, if it is really necessary.
It is hereby informed you that without compliance of the above
formalities, if you proceed with the implementation of the contract,
my clients will be constrained to take legal proceedings in the
appropriate court of law, which please take notice.
Dated this the 24th day of February 2007
SIVAN MADATHIL
Copy to: 1. His Excellency The Governor of Kerala,
Raj Bhavan, Thiruvananthapuram
2. Hon'ble Chief Minister of Kerala,
Secretariat, Thiruvananthapuram
SIVAN MADATHIL B.Sc. MBA, LL.B.
Advocate
High Court & Supreme Court
'30/1894'
'Indeevaram'
Kaiyath Lane.
Palarivattom: Cochin: 25
Tel: 0484 - 6504646
Mobile: 94472-60688
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