Angry about Anger - Thoughts on Kolkata Flyover collapse

The immensely tragic collapse of the under-construction flyover in Kolkata, has predictably opened up a huge vent for the emotionally and politically hyper people of West Bengal, most of whom also possess poetic and literary aspirations and illusions, which are divorced from their sub-mediocre reality. (The amount of bad, actually fecal, poetry I have received on WhatsApp on this incident is not funny at all!!)

Juxtaposed with the coming election, the sensational and bottom of the barrel media personnel, and disgustingly opportunistic political posturing, the noise has become unbearable. I have been following the stuff on media and a bit on social media. And I'm seriously disturbed by the discourse - public, political and media. Fault finding, blame game, political mudslinging. This, is a very regrettable condition! The politicians and politically unbiased people have their own vested interest in the coming elections. Media has its own commercial interest. None of these justify the din.

But, educated public? Why are they so gullible? Why do they seek simplistic answers when there's none? Why do they add to the noise and clutter? Why are they in a hurry to fix a quick blame and do some hanging? Why have the people of WB become the lynch mob of the country in last 4-5 decades?

Anyway, in the face of the public hunger for a simpler narrative of getting justice and closure, by finding and hanging some people, I supposed that I will put my thoughts on paper to explain the complexities of the issue. And I decided to do that in a dry corporate-legal style, thereby shunning emotions and biases and sticking to experience and rationality and theses based on that. The objective is to make ‘educated common people’ who are caught up in this frenzy, get to know and understand the issues, in, not simple, but not also complicated terms.

1.       IVRCL – Let me start with the contractor itself.

a.       IVRCL was a leading infrastructure player (EPC contractor and BOT project owner) in the country, till the financial crisis started hitting the sector very hard

b.      So, I guess there was nothing grossly wrong in CPM/ left front awarding the contract to them through a competitive bidding

c.       IVRCL, is not alone to suffer humongous financial setback since global financial crisis.  Yes, IVRCL was one of the most aggressive players, with political contacts with Maha and AP politicians, and thus had a very leveraged balance sheet. But barring the likes of L&T and Mahindras and probably Simplex, nobody can claim clean sleeves in this sector and leverage as hurt some of the best real asset players in the world.

d.      Some of you would know the issue of non-performing assets in the banking sector.  You should also know that this is part of large business/ economic cycle that takes place. At the time of growth and inflation, companies incur capital expenditures or inventory buildup expecting demand growth. And when that does not happen or slows down, the debt trap happens.

e.      Moreover, contrary to the less-informed Mallya narrative of mass media, it is the infrastructure and capital goods sector which has suffered most. The names are innumerable, but Jaiprakash, Gammon India, HCC, Patel Engineering, GVK, GMR are to name a handful few. And yes, IVRCL is one of the worst affected among the lot.

f.        IVRCL’s bankruptcy is post 2009, and is not a reflection of its technical competence. I do not have the details of the railway issue that got highlighted, but it suffices to state that government departments, from time to time, take punitive measures against contractors, for correct and contractual reasons but not always meriting this kind of stigma.

2.       Now, about the project delay –

a.       Public construction projects get delayed for various reasons and they get delayed all over the country and all the time.

b.      The reasons mostly come from the issues of land acquisition, regulatory clearances and timely fund release by the government. 

c.       And in case of very rare contractors, there may be sheer technical incompetence, which is not the case of most like IVRCL.

d.      Occasionally, the contractor is culpable of diverting the money to other projects and then not being able to bring it back and thus suffering liquidity crisis. Or having liquidity crisis because of over extending itself over many projects. This may be the case of IVRCL.

e.      In Mumbai, the Santa Cruz Chembur Link road and the Chembur overpass remained half built for many many years. And Bandra Sea Link is epic in the annals of project delay.
(The last one had angles of political corruption as well, as the project cost got inflated by a large multiple over all those years – this is a model reportedly designed and used by a former Maharashtra CM in many public projects, to amass enormous wealth, to the tunes of twenty/ thirty thousands of crores. Bengalis and Bengali politicians are thankfully not up to this level of sleight.)

3.       Cancelling the contract

a.       This is a very tricky issue. Having seen and having indirect knowledge of funding both the large contractors and their customers (public and private), I realise that cancelling an EPC contract in the midst of the project is close to impossible, and some of the key reasons are:

                                                               i.      As mentioned, most of the time, the delay is because of reasons beyond the control of the contractor and rather that of government or the contracting customer

                                                             ii.      A contract is generally terminated on “non-performance” (this phrase, like the “act of god” is a legal term and has deeper connotation than what normal understanding supposes). And it is extremely difficult to prove non-performance in any court of law.

                                                            iii.      Lastly, a cancellation of a project in the middle, especially by a government, means almost shelving the project, as most of the design and technology has been provided by the contractor and governments (especially backward states like WB) do not have the wherewithal to carry it through with another contractor in a reasonable time frame.

4.       About corruption and its implications
The usual refrain under such circumstances, is that corruption is responsible for these incidents. Possible. But not mandatory.

a.       First, be aware, that the award of public projects has been fraught with the risk of corruption by public officials for a very very long time. There are plenty of stories of British officers making a fortune during pre and during war construction boom in India.

b.      Question is, why corruption and what is the impact of this corruption, if any?

                                                               i.     Reason for corruption Most people who are allowed to bid for these projects have to be pre-qualified by various track record and experience. The driving force behind corruption is unfair advantage in the face of equal competition and NOT to construct something below par.

                                                             ii.      Lowering of the quality of the construction – this used to be and still is the case for simple road repair, or even open sewerage, where the downside risk is minimal. However, for critical stuff like bridges and power plants, such is almost never the case. The risk to the companies and the officials and legislators are too high. So, what happens….?

                                                            iii.    Increase in cost – So, to cover the cost of the corruption, contractors do cost escalations, which are approved by the people who have been on the take. That does not seem to be the case of Vivekananda Flyover. It must also be kept in mind that all cost escalations are not because of corruption. If a project gets delayed by many years, then one has to keep in mind the effect of inflation as well.

5.       Hurrying up the project

a.       Firstly, it is important to ask, if it is mala fide to expect and ask for a quicker completion of a project which has been stuck for a long period of time?

b.      Secondly, it is needed to examine if such requests/ or instructions were made, and on account of that if some act of negligence took place
(More later on reasons for the accident)

6.       So what should be done now? - 

a.      Of course the first thing to do is to take care of (treat, rehabilitate and compensate) the affected parties, to the best of the ability of the government and even greater public

(In fact it is rather bemusing to note that a normal and usual action of announcing monetary compensation has been met with such bitter and (bad) poetic vehemence, in this case.)

b.      Then a neutral and objective investigation should be done to find the reasons behind the collapse

c.       And take prompt appropriate punitive and/ or corrective action

7.       Now, what could be the possible reasons for such incidents.

a.       Well, I am neither an expert nor chronicler of such incidents. But by some experience and method of abstraction, my guess that the reasons generally would fall among the following:

                                                               i.      Act of God
First a good definition – “In common law, an overwhelming event caused exclusively by natural forces whose effects could not possibly be prevented (e.g., flood, earthquake, tornado).  In modern jurisdictions, "act of God" is often broadened by statute to include all natural phenomena whose effects could not be prevented by the exercise of reasonable care and foresight.”
Now it is also important to differentiate accident and Act of God. Accident is the event, Act of God is one of the many reasons leading to such event.

                                                             ii.      Human Error
Human error is easy to understand. “Human error means that something has been done that was not intended by the actor; not desired by a set of rules or an external observer; or that led the task or system outside its acceptable limits."
Anecdotally, one junior and very efficient person in my investor relations department, had, by mistake sent an investor bulletin and put all e-mail ids in cc: instead of bcc:, leading to some commotion. (My CEO twisted herself about it and made me fire the person against my vehement opposition, because she saw spectre of sabotage). Now this was a human error.

                                                            iii.      Negligence
is “unintentional failure to exercise the care toward others, which a reasonable or prudent person would do in the circumstances, or taking action which such a reasonable person would not without any intention to harm. Negligence is accidental as distinguished from "intentional torts" (assault or trespass, for example) or from crimes…”
Now, in the above anecdote, if there was a checklist or an SOP (standard operating procedure) which that person had ignored, possibly in hurry, then it would be a case of negligence.

                                                           iv.      Criminal/ wilful negligence
Criminal negligence is negligence where there is an intention involved and/ or the ramifications of negligence is huge, like drunk driving. But there has to be a ‘mens rea’ to prove criminal negligence. “Mens rea is a legal phrase used to describe the mental state a person must be in while committing a crime for it to be intentional. It can refer to a general intent to break the law or a specific, premeditated plan to commit a particular offense.”

                                                             v.      Malafide action, including sabotage or subversion
This does not need much elaboration.
This angle needs to be checked as the company has raised an insinuation. But my guess is that it is a desperate ploy by a legal counsel to divert such unpleasant attention on an already troubled company.

b.      In most cases, the real reason falls between human error and negligence. The corrective actions thereafter are about strengthening the process by all parties to avoid such events in future.

c.       In case of criminal negligence, or even corruption with knowledge of impending risks, if proved, strong punitive measures, as per the law of the land, should be taken.

This is not a comprehensive and full researched article and thus carries its own risks of simplification and generalisation. And I will be grateful to engage with anyone who would like to enrich the content towards the goal of objectivity and not of media and public trial and vengeance.

I also know that this is a futile exercise. The ethos of West Bengal, the immense unawareness of its educated public of economic governance, volatile nature of its politics, the irrationally passionate character of the people and its penchant for violence and vengeance has made WB a basket case. And for them, emotionless facts, information and issues, which cannot be converted into poetry (good or bad) or films (sleek, lush, ad-like, like the new generation hits), do not make any sense. For them, if you cannot blame and lynch someone, then it is a non-issue. I am not sure how many of my friends and acquaintances, coming from the lineage of "famously voracious Bengali readers", will even read this full article, especially as soon as they realise that I am not going to hang their chosen political adversary, whoever that is.

This does not give me any pleasure, because wherever I am and whatever I do, I cannot and do not intend to deny my identity of a Bengali and that West Bengal is my home. But a home I am very terrified to return to.