People's Democracy

Centaur Scam: Distress Sale

To A Pre-Decided Bidder

Nilotpal Writes to PM

REITERATING the demand for a Central Bureau of Investigation (CBI) probe into the controversial Mumbai Centaur Hotel privatisation deal – in which the Comptroller and Auditor General of India (CAG) has revealed a loss of over Rs 145 crore to the exchequer – the CPI(M) floor leader in Rajya Sabha, Nilotpal Basu, has written to the prime minister, Atal Bihari Vajpayee, urging him to order a full CBI inquiry in all aspects of the sale of Centaur Hotel, Mumbai. He termed the deal as the “distress sale” of the public sector undertaking to a “pre-decided bidder.”

Releasing the letter at a news conference in New Delhi on February 21, Basu decried the reaction of the disinvestment minister, Arun Shourie, to the demand made by the CPI(M) for a CBI inquiry. He said when the matter was raised in parliament, Arun Shourie had brushed off the charges of irregularities in the deal saying that he would relent only when there is a check audit by the (CAG) which substantiated the charges. Now when there is CAG report confirming the charges made in parliament, the minister has reacted “angrily using intemperate and completely unacceptable language on the methodology adopted by the CAG” for which he has subsequently tendered “unqualified apologies” but has stuck to the rebuttal of the report.

In such circumstances, Basu said, he has requested the prime minister that in the interest of probity in public life and transparency in governance, a full CBI inquiry into all aspects of the deal must be ordered. “It is the rightful prerogative of the parliament to scrutinise the manner in which public assets are being privatised. This is part of  Budgetary function”, he said.

Responding to newmen’s queries, Basu said in other countries where privatisation of public assets is taking place and allegations of irregularities have been made, heads of  many prime ministers and presidents have rolled but here nothing happens adding that the government has been undermining all public institutions like the National Human Rights Commission, Minroities Commission, Election Commission, Supreme Court and CAG.  “Whenever they are in trouble, they attack the institutions”, he said.

In response to another question about chartering of a special plane for the deputy prime minister for electioneering, Basu said the sources of such funds by political parties, particularly the parties in power, must be probed.

Following is the full text of the letter:

Dear Shri Vajpayeeji,

I AM constrained to write this letter to you in the wake of serious charges levelled against your government on the floor of the Rajya Sabha (during the Short Duration Discussion on Disinvestment of Central Public Sector Undertakings held on December 4, 2002) being substantiated by the Report of the CAG (Report No. 3, 2004 – PSUs) placed during the last session of parliament. The CAG Report has confirmed that Rs 145 crore of revenue to public exchequer has been squandered away through the deal in the sale of government-owned Centaur Hotel, Mumbai (of Hotel Corporation of India) to Batra Hospitality Pvt. Ltd. on April 18, 2002.

Shri Sitaram Yechury, Polit Bureau member of my Party and myself held a press conference on February 19, 2004 and jointly issued a statement demanding a CBI probe into the deal. I am appending herewith a copy of the statement for your perusal and follow-up action.

Shri Arun Shourie, Hon’ble Minister of Disinvestment of your government had reacted to our charges, in my opinion, rather angrily to our statement, using intemperate and completely unacceptable language on the methodology adopted by the CAG on the same evening. Yesterday, he has subsequently tendered his unqualified apologies for the intemperate language he had used but has stuck to his rebuttal of the CAG Report. It will not be difficult for your Office to place before you the press report and video clippings of the statement he made both to the print and electronic media to ascertain the facts.

But he did little to clarify the real issues raised by us. We had asked the following questions regarding the sale of the Centaur Hotel, Mumbai:

1. Why was the turn-over levy which was to be paid by the prospective buyer for the asset on sale brought down from 6 per cent as mentioned in the original tender to 2 per cent in the final process on the basis of which sale was confirmed?

2. Why was this change in the turnover levy not communicated to all the parties who had responded to the tender?

3. Why was deal finalised by the single bid, which was offered to the government?

The explanation of Shri Shourie that his Ministry acted on the recommendations of the Cabinet Committee on Disinvestment in bringing down the turn-over levy to elicit more offers because all the original bids in the first round were below the reserved price fixed by the government. The question arises that in that case, it was all the more necessary for the government to widely notify the change in the tender conditions. In the absence of such a procedure, one cannot but conclude that it was a ‘distress sale’ of a PSU asset to a ‘pre-decided bidder’. This is also borne out by the fact that within three months the Batra Hospitality Pvt. Ltd. had re-sold the property to an Airlines company with a premium of Rs 35 crore.

Neither did Shri Shourie answer the vital questions levelled originally in course of the discussion in Rajya Sabha –

1. Why was the re-sale made notwithstanding and express clause (viz. 13.4) of the sale agreement between Hotel Corporation of India and Batra Hospitality which stated – “neither this agreement, nor any benefits, or burden under the agreement shall be assignable by either party without prior written consent of the other party”?

2. Whether the re-sale stands in complete violation of a condition of the guidelines to the original tender which stated ‘no Airline companies will be allowed’ to purchase Centaur Hotel as they stand in airport premises?

 It has been widely reported in the press that the CBI under your charge is probing certain opposition leaders with great zeal about certain irregularities. Your party had also claimed in the previous elections that once voted to power, you would unleash a crusade against bhay, bhookh and brashtachar. We are also being informed by your party and through public advertisement issued by your government that you are the greatest prime minister in the last 50 years since the country has attained independence.

Therefore, with all humility and modesty, I would request you, that in the interest of probity in public life and transparency in governance, as a custodian of public assets you must order a full CBI inquiry in all aspects of the sale of Centaur Hotel, Mumbai. I am also sure that Shri Shourie will not mind because in the wake of our earlier charges of irregularities in the sale of PSU assets, he had brushed us off saying that only when there is a check audit by CAG that substantiate our charges in the Parliament, will he relent. (INN)