The Hindu Business Line : Govt to wait for CAG report on Centaur deal: Chidambaram

THE Government will wait for the Comptroller and Auditor-General of India's (CAG) report on the disinvestment of Centaur Hotel in Mumbai before deciding on the `discomforting aspects' of the sale concluded during the previous NDA regime, said the Finance Minister, Mr P. Chidambaram.

Replying to the debate on a calling-attention motion in the Rajya Sabha on the disinvestment of the public-sector hotel on Juhu Beach, Mr Chidambaram concurred with a demand from the members that the best course would beto order an inquiry into the sale transaction, if everyone agreed. But the Government will prefer to wait for the CAG report on the issue.

"Nobody is questioning the merits of the privatisation, but doubts have arisen about whether it was done in a fair and transparent manner. Many members have expressed their legitimate doubts, perhaps it is best to agree to an inquiry.

"I personallyfeel thatthe previous Government was driven by a zeal for disinvestment and had overlooked the discomforting questions," Mr Chidambaram said.

The Finance Minister said the agreement did not permit re-sale, and the subject was before the court. The buyer was bound to offer a voluntary retirement scheme for the employees by May 30 last year. If there are any violations, the Finance Ministry will go into it, he said.

The question is whether it is prudent to pursue a single bidder for such a huge deal without invoking bank guarantee.

In fact, the then Government decided to invoke the bank guarantee of Tulip Hospitality Services Ltd on February 21, 2002, and terminate the deal as concerns had cropped up on Tulip's ability to meet the financial obligations under the transaction. But, later the Government decided to revoke the decision after Tulip's Chairman produced his consortium of bankers before the then Disinvestment Minister, Mr Arun Shourie, on February 23, and pledged to finance the sale transaction by March 9, 2002.

Eventually, the transaction was completed on March 11, 2002. The hotel property was transferred to Tulip on 31 May 2002.

The minister said it was "not a coincidence" that the Air India Board was re-constituted a day after it decided to disinvest the hotel, and Mr Ajit B. Keskar ceased to be its member and joined the bidder.

Raising the issue, Mr Dipankar Mukherjee (CPI-M) said the seller turned out to be the buyer in the Rs 153-crore disinvestment deal, thus making the transaction look shady.

Mr Mukherjee wanted the Government to make it clear that the person representing Tulip Hospitality Services Ltd was a member of the Air India Board, whose subsidiary - Hotel Corporation of India - owned the Centaur. The same person was also the member of the sub-committee on the disinvestment of Air India.

Mr Mukherjee also sought to know the rationale behind giving extensions to the company to execute the deal.

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