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Bidding for stakes in PSUs -- Bar on cos with `moral turpitude' offences likely

P. Manoj

NEW DELHI, May 1

THE Department of Disinvestment (DoD) is likely to bar companies that have committed offences of `moral turpitude' nature from bidding for acquiring Government stakes in public sector undertakings (PSUs) lined up for divestment.

``In the Indian Civil Service, officers are suspended if they are found guilty of moral turpitude. We are looking at what constitutes moral turpitude in the corporate sector'', senior DoD officials told Business Line.

The Law Ministry had recently advised the DoD to come up with a list of serious crimes that would prevent companies from participating in the PSU divestment process.

The issue cropped up after the Securities and Exchange Board of India (SEBI) had banned Sterlite Industries, Videocon and BPL from accessing the capital markets for a certain number of years for its involvement in the price manipulation of shares in the stock market.

All the above three companies are in the reckoning for acquiring controlling stakes in some of the PSUs that have been put on the block by the Union Government.

While Sterlite has acquired Balco and is in the race for Hindustan Zinc and Hindustan Copper, Videocon had bid for Indian Airlines and VSNL. BPL is also a contender for acquiring the Government stake in VSNL.

The Minister in-charge of the DoD, Mr Arun Shourie, and his team of officials have started work on listing the serious crimes as directed by the Law Ministry and a final view in this regard would be taken soon, the officials said.

Instead of banning companies individually, the DoD prefers to define the acts which constitutes moral turpitude and then see whether the prospective bidders come under the definition or not.

``Acts, which shows the basic character of a company in poor light, causes embarrassment to the Government if a PSU is sold to it, thereby, affecting future disinvestment deals would be a sure-fire case for disqualification'', the officials said.

The DoD is in the process of defining moral terpitude and quantifying the acts that come under this definition.

The Department has already decided to ban companies which poses a threat to the national security from participating in the disinvestment process. ``Even a mere charge-sheet will be enough to disqualify companies from participating'' the officials stated .