People's Democracy

  Shourie Vs Shourie

Dipankar Mukherjee

DO you remember the follow ing sentences from Indian Express editorial dated July 21, 1989, and titled "Expose the truth" on Howitzer contract for Bofors:

"…..Mr Gandhi has a huge parliamentary majority that will turn its howitzers on the CAG instead of the government and Doordarshan can be relied on to follow Mr K K Tiwari’s dictum that credibility does not matter…..Cynics and Congress-wallahs will claim that CAG report means little. It does not provide legally conclusive proof of corruption. Some of the CAG’s comments on the choice of the Bofors howitzer can be called subjective nitpicking. But the key issue is not a technical one about the relative merits of the Bofors and Sofma guns. What is damning is the government’s attempt to dodge inconvenient question from the CAG for two years….This suggested a connected attempt on the part of those in power to hide rather than pursue the truth…." (incidentally Shourie was the editor)

How prophetic! You have to only substitute "Congress-wallahs" with "Shining-wallahs", and K K Tiwari with Arun Jaitely. For a change this time there is not one but two CAG reports and one standing committee report which put Shourie and the NDA government on the dock on the sale of two government owned hotels – Airport Centaur and Juhu Centaur in Mumbai.

There was a furore when Batra Hospitality Private Limited (BHPL) which purchased this hotel at the cost of Rs 83 crore, resold the same reportedly at a price of Rs 115 crore within six months after sale through disinvestment ministry. During the discussion in Rajya Sabha on December 4, 2002 there were serious charges about this transaction. There was a demand for CBI inquiry into the whole transaction from the House, including from the NDA allies. The then disinvestment minister dismissed the charges as fabricated and did not respond to specific acts of omission by the government in the whole deal favouring one single individual i.e., A L Batra, the owner of BHPL, who had subsequently resold the same at Rs 30 crore premium within six months to Sahara Hospitality Ltd.

Parliamentary standing committee on ministry of transport & tourism took up the issue and in its 65th report to the parliament presented on March 10, 2003 recommended inquiry by Central Vigilance Commission on the following specific issues:

1. Selection criteria

2. Reduction of turnover levy

3. Rebidding process

4. Transfer of an IOC petrol pump in the hotel to BHPL without the knowledge of IOC.

The government did not take any action on the recommendations although the debate in parliament and the standing committee’s report had highlighted how a public asset was sold at a throwaway price to help a single bidder.

CAG report No 3 of 2004 (PSUs) laid in the House just before the 2004 election confirmed loss of Rs 145 crore revenue to public exchequer because of undercharging of lease rent and deduction of turnover levy during the sale of this hotel. The CAG Report No 2 of 2005 has now strongly indicted this fishy deal with the observation that, "assumptions made during valuation of the properties and fixation of reserve price of Airport Centaur were not consistent with the practice followed by the ministry in other cases and the ministry’s inconsistent approach which resulted in a lower reserve price appears peculiar."

A look at the chronological events in the sale of this 6 acre, 371 room – 5 Star Hotel reveals the tale of crony capitalism at its best at the cost of public assets.

l The hotel was running on profit till year 1999-2000 and it started making losses when the disinvestment process was initiated in 2000-2001.

• Ajit B Kerkar was a member of Air India board and also a member of Board of Sub Committee on Disinvestment of the Hotel Corporation of India Ltd. (HCI), which took the decision to sell Centaur Hotel.

• Kerkar changed his role from a seller to a buyer when he as the chairman of one Tulip Hospitality Services Pvt. made the bid for buying CHJB in October 2000, and more interestingly this seller-cum-buyer became the only bidder in the final sale bid.

• Air India vide its letter dated November 21, 2001 informed Kerkar and his Tulip Hospitality Services Pvt. Ltd. (THSPL) that its financial bid for Rs 153 crore has been accepted. THSPL was to make arrangement for payment of this amount within a maximum stipulated period of 30 days as per the terms of the Bank Guarantee submitted by THSP as a part of the financial bid.

• Thus the last date for payment ofr Rs 153 crore was December 20, 2001 failing which the bank guarantee was to be encashed and the deal was to be treated as cancelled. However, when the payment was not made, instead of terminating the deal and forfeiting the bank guarantee, extension was unduly granted to THSPL on one pretext or other. In a letter dated December 28, 2001, Shourie wrote to the minister of civil aviation stating that the validity period of bank guarantee is up to March 31, 2002 and he hoped to resolve the issue before this. This was an usual Shourian way of confusing and covering up the violation of the transaction which mandated the purchase deal to be finalised by December 12, 2001 failing which the transaction was to be cancelled.

• As a matter of fact, on February 22, 2002 a group of officials of Air India and Hotel Corporation of India had proceeded to Delhi and visited Bank of Rajasthan Ltd., with the specific objective of enchasing the bank guarantee, but they were asked by the ministry of disinvestment not to pursue the same.

• The very next day, i.e., on February 23, 2002, the disinvestment ministry intervened to help THSPL to arrange the requisite fund. THSPL with its meager capital could not manage Rs 153 crore and hence it was the much maligned public sector banks who had to dole out public money of Rs 129 crore to finance the sale of public assets. Shourie arranged the meeting in his office on February 23, 2002 between the bankers and Kerkar so that the sale agreement and the loan given by the bankers are finalised on the same day, ostensibly to ensure that the agreement to sell could precede the payment of purchase price of Rs 153 crore.

CAG Report 2005 has pointedly brought out the gross inconsistencies in the relaxation/deviations that were offered to the sole bidder of Juhu Hotel. They are:-

1. The scrutiny of the financial strength of the bidder was inadequate.

2. Repeated extensions granted to the bidder.

3. Bank guarantee not enchased despite breach of terms and conditions.

4. Ministry did not charge interest on delayed payment.

5. Ministry intervened to facilitate financing of the deal.

The final telling blow to all the disinformation now being spread by the "Jodi" of two Aruns, is the concluding para of the CAG report covering both the hotels which says, "Thus, both transactions became sole bidder cases without the benefit of competition…….. Various relaxation allowed to the bidder and interventions by the minisry to facilitate the sale, indicated inadequate efforts to mitigate the risk of transaction in a limited competition scenario. The efforts made to balance the need and urgency to sell the properties and to obtain the nest possible price from the sale were also not evident."

From the above there cannot be any doubt that there is a prima facie case for a CBI inquiry into the role of minister concerned and others to facilitate the sale of public assets at a throwaway price to some front companies who have utilised this opportunity to resell the same at a premium involving crores of public money. Such action cannot brook any further delay as with the passing of every day the intimidation, indirect threats, tale-twisting could intensify from Shourie and his RSS mentors. There are chances of tampering with evidence to kill the case as they are aware that an inquiry by CBI is likely to expose that the fraudulent sale of these two hotels would only reveal the tip of an iceberg. The fact is that the disinvestments scam during NDA regime is mother of all scams where vast sum of public money has been squandered. In Shourie’s language "what is more damning" is a concerted effort to distort and twist the truth so as to avoid as trial before the people for planned acts of omission and commission by the NDA government to strip the public assets of the country.