PALAKKAD: The Centre of Indian Trade Unions (CITU) and the Democratic Youth Federation of India (DYFI) have demanded that the Government order high-level inquiries into the irregularities involving crores of rupees in the public sector Malabar Cements Limited (MCL) here as revealed by the Controller and Auditor General (CAG) of India.

Malabar Cements Employees Union (affiliated to the CITU) president M. Chandran, MLA, on Tuesday demanded a comprehensive inquiry into the large-scale corruption revealed by the `Inspection report of the audit of accounts of MCL for the years 2004-05 and 2005-06.' He said the two-year audit showed irregularities to the tune of Rs.400 crore.

CITU district secretary A. Prabhakaran warned of a mass agitation demanding action against those involved in the scam.

The DYFI demanded judicial and Vigilance inquiries into the irregularities. DYFI district president Subash Chandra Bose and secretary M.B. Rajesh said this was the biggest scam of its kind in Kerala. They demanded a Vigilance inquiry into the involvement of top politicians and government functionaries in the irregularities.

According to the CAG report, ``the complete purchasing system is in gross violation of government norms for store purchase.'' From 1995 onwards, Rs.125 crore has been spent on purchase of capital equipment without increasing the production even by one bag. A sum of Rs.32 crore has been spent on a clinker project, which is the project cost for a similar cement plant. ``The investment in the Clinker Plant at Sherthally (Cherthala) cannot be justified,'' it said.

The original proposal (in 1995) was to put up a clinker plant at Kuttipuram, the constituency of the then Industries Minister. The Industrial Development Bank of India refused to give loan for the project and the Board of Directors of MCL at its 101th meeting on December 23, 1995 rejected the proposal.

But when the next Ministry came to power, the proposal for the 600-tonne cement grinder unit was revived though the Government itself found it financially not viable. This time the location was Cherthala, home district of the then Industries Minister. And the company started buying clinker from outside from 1996 onwards.

According to the CAG report, the purchase of clinker has resulted in considerable loss to the company. There is limestone deposit in Walayar itself. Moreover, the company has invested considerable amount on mining equipment. Besides, surplus labour has been available there.

It was not in the company's interest that the clinker unit was set up in Cherthala. With an investment of just Rs.5 crore in Walayar, against an investment of Rs.32 crore in Cherthala, the company could have achieved complete production of the clinker unit and made substantial profit.

According to the report, for the past 10 years the company has stopped buying spares from recognised companies. The company is having an inventory of Rs.22 crore of spurious spares which will have to be written off.

The CAG has also found irregularities in buying imported coal instead of importing it directly by the company after floating global tenders.

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