‘Privatisers Of The World Unite! 

You Have Vast Public Assets To Loot!!’

Dipankar Mukherjee

WELL, that is the clarion call by most of the corporate media, the Shouries & Jaitleys, to M/s Manmohan Singh and Chidambaram on the inquiry ordered by the UPA government on the sale of Airport Centaur and Juhu Centaur hotels of government owned Hotel Corporation of India following the CAG report No.2 of 2005. Their salient point is that the inquiry is an assault on disinvestment and privatisation. In the din of the rumblings based on baggage of disinformation there is a concerted attempt to gloss over the facts to cover up the fraudulent deals carried out in the name of disinvestment by Shourie and his disinvestment ministry during the NDA regime.

WHAT WAS THE OBJECTIVE - SALE OF BUSINESS OR SALE OF PROPERTY?

Para 4.0 of the minutes of 172nd Board meeting of the Hotel Corporation of India held on 19.11.2001, where the sale transaction of the hotel was approved, states the objective clearly:  “….Managing Director informed the members about the various transaction documents for the sale of business of various units except Centaur Lakeview Hotel, Srinagar….” So it is “sale of business,” not “sale of property” which formed the basis for invitation of Expression of Interest (EOI) from different bidders for acquiring these hotels on a `going concern’ basis. The footnote in the CAG Report (page 41) clarifies in no uncertain terms the  “going concern envisages continuance of operation of business by infusing  superior technical and managerial skills besides additional capital.” This was the objective till May 2001 while short listing of bidders and due-diligence were carried out. It was in September 2001 that the ministry of disinvestment took over the process and the sale of Juhu Centaur was concluded in March 2002 realising Rs 153 crore and Airport Centaur was sold in April 2002 at Rs 83 crore as a going concern. What happened in September/October 2002? Airport Centaur was resold  at Rs 113 crore by the buyer i.e. M/s  Batra Hospitality Pvt Ltd. (BHPL) to Sahara Hospitality not as a “going concern” as a hotel  but simply as a property.

Did it happen suddenly? At least the parliamentary standing committee on transport & tourism did not think so. From its 65th report, dealing with sale and resale of Airport Centaur Hotel, laid in parliament in March 2003, I quote para 14 of the recommendation for the benefit of those who are talking (knowingly or unknowingly) for probe by PAC or JPC:  “The Committee notes that the financial strength in respect of AB Hotels Limited (Radisson) was only taken into consideration for short listing M/s A L Batra. However, in the subsequent process Batra Hospitality Private Limited (erstwhile Batra Nibgo India Private Ltd) has been used as SPV. The list of companies of AL Batra Group, as given in the  details submitted, does not include the name of M/s Batra Nibgo India Private Ltd name of which has been changed to Batra Hospitality Private Ltd. While AB Hotels Ltd does have the relevant experience of running 5 star hotels and the financial strength of AB Hotels Ltd has only been taken into consideration for short listing, use of BHPL as SPV raises serious questions regarding the intention of the buyer. BHPL has been brought into the picture as SPV for acquiring the CHMA which appears to be a pre-motivated objective to dispose of the same flouting the provisions/conditions of sale, since the transfer of 100 per cent holding in BHPL will automatically lead to the transfer of the property and not sale of the property. This would not have been possible if AB Hotels Ltd had acquired CHMA. The committee is of the view that the above issue requires a detailed investigation.”

Shourie did not agree for the investigation two years back. Why? Would the “Chhota Shouries” in the media bother to reply on his behalf? The committee had said that the motive of resale was pre-motivated. Resale not of the business, but of the property. Would you call it as disinvestment as a going concern or property deal where a speculator earned Rs 30 crore within six months without infusing any technical-managerial skills or additional capital?  Refusal of investigation two years back shows that Shourie and his ministry had implicit knowledge about the deal, which they did not want to reveal at that stage. This becomes explicit in the second sale of Juhu Centaur. Confronted with the reported deal of Kerkar to resell the Juhu Centaur with a premium of Rs 250 crore to some builders (nearly 150 per cent gain), Shourie tells in an interview: “I have been hearing this for four months. When we sold it, I assumed he would sell it. When someone buys a property, he has a right to sell it 100 per cent.” (Outlook May 23, 2005)

It means that the former minister himself knew it would be resold. But more than that he himself admits someone is buying a “property” – not a “going business”? Would the reformers/privatisers still call it disinvestment of business or a property deal by a speculator? If the objective of word “disinvestment” itself is totally diluted or perverted  to a mere property deal on Shourie’s own admission to facilitate Rs 30 crore premium within six months to one Batra and Rs 200 crore bonus to one Kerkar,  is it not a prima facie case to investigate  the reason behind changing the objective of “disinvestment” as perceived by the market reformers themselves? “I assumed he would sell it” holds good not only for Kerkar but for Batra also. Is this process of sale of a business to be resold as property on a premium the new concept of disinvestment? Is it not true that an IOC oil pump in Airport Centaur was also given to Batra without the knowledge of IOC and ministry of petroleum (Standing Committee report para 33)?  But then it is such a petty matter that even if a petrol pump goes as a bonus to a trader-cum-speculator in  the name of disinvestment it is fine. Similar bonus in terms of land and state guest house in the case of Kovalam Hotel (ITDC) in Kerala may surprise “lay-people” (courtesy: Shourie), but for the walk the talkers it is only the part of new adage  “Everything is fair in love, war and DISINVESTMENT.”

AREAS OF DISCOMFORT

Yes, I am using the words of the present finance minister, which unlike those of the communists, are suave enough to satisfy Shourie & company. Two areas of discomfort which the finance minister referred in his reply in Rajya Sabha on 18.8.2004 regarding Juhu Centaur are  (a) repeated extension given to Kerkar in spite of his inability to arrange money for the purchase and (b) the meeting with bankers and bidder on Sunday(!) February 23, 2002.

Regarding repeated extension and non-encashment of bank guarantee beyond the stipulated date of 22.12.2001 when the transaction was to be completed, Shourie says,  “The fact is we were left with one bidder in the  end. And he was having difficulty in raising the money…..when I ordered twice that his bank guarantee be encashed, the purpose was not to cancel the deal but to pressure him.” (Outlook, May 23, 2005)

Are these new guidelines for privatisation?  That is (a) If a buyer has difficulty in raising money, it is the solemn duty of government to remove the difficulty and of course as per Shourie again “in a country where you have nationalised banks where else will any one get money from?” and (b) If there is a condition in transaction to cancel the deal and encash the bank guarantee, it is only in paper and it is a MINISTER’S SWEET WILL not to cancel the deal but to put pressure in his own way.

The question is who was being pressurised on February 23? The bankers (to be  precise those present were not even chairman of the banks, but officials in the rank of Assistant GM, Dy GM, Addl.GM, GM only) or the bidder i.e. Kerkar? Who will find out what happened in that meeting? One suggestion may be that if a seller can become a buyer like Kerkar, why not former ace investigative journalist-cum-minister can himself investigate or a trial by media in Walk the Talk or Talk & Walk. But the common folk of the country, including the  employees (both officers & workers) of both the hotels who are now on the road, would demand answer to these and other questions immediately to find out the intention behind, what looks like an open and shut case of monumental procedural lapses causing loss to the exchequer, as quantified in CAG report No.3 of 2004 (PSU) and CAG report No.2 of 2005 and adverse observation of the parliamentary standing committee in 2003. Is it corruption, or nepotism? Who were behind these front companies which were utilised to buy a business and then to sell the same as property? Being government property this has to be investigated by a government agency. This cannot be left to “privatisation-at-any-cost wallahs”. That is why a demand for a CBI probe after two CAG reports and one parliamentary committee report and recent admission of certain startling facts by Shourie himself.

The criminal intent of hiding the facts leading to the loss to the exchequer by favoring a single bidder whose intention was known in advance by the seller needs no further elucidation through a time consuming fact-finding machinery, whether judicial or parliamentary, but through a probe by the investigating agency of the government to go through the prima facie evidence available now in the public domain.