• PAGE ONE
• INDEX
• HOME

Congress calls for scrapping AI disinvestment process -- Cites `close relationship' of Morgan Stanley with Tatas

Our Bureau

NEW DELHI, July 22

THE on-going process of disinvesting Government's stake in Air India, should be scrapped and fresh bids called to select a strategic partner for the national flag carrier to overcome the discrepancies that have crept into the present process, senior Cong ress leader and chief whip of the Congress Parliamentary Party (CPP), Mr Priya Ranjan Dasmunshi, said here on Sunday.

Releasing copies of the letter written to the Minister in-charge of the Department of Disinvestment, Mr Arun Shourie, on July 21 regarding the sale process, Mr Dasmunshi raised several issues that have obliterated transparency from the process, principal among them being the last-minute U-turn in the shareholders agreement on the appointment of directors on the board of privatised Air India.

Casting doubts over the objectivity and integrity of the global advisor to the Government for Air India deal, J.M. Morgan Stanley, in view of its closeness to the Tata Group, the only bidder left in the fray in consortium with SIA of Singapore, Mr Dasmun shi said, ``The Government should assess the value of Air India by appointing an independent global advisor through global newspaper advertisement scrapping the present process.''

According to him, the close relationship between the Tata's and J.M. Morgan Stanley (its Chairman, Mr Nimesh Khampani, was on the board of the Tata-managed Indian Hotels for a brief period) has completely destroyed the foundation of objectivity, impartia lity and transparency of the global advisor.

``Quite clearly sensitive information must have been passed from them to the Tata consortium and therefore, the existing arrangement with J.M. Morgan Stanley should be terminated,'' he said.

Second, Mr Dasmunshi urged the Government to invite fresh bids after stating clearly the Government's condition and policy regarding the ultimate management control in the post-disinvestment period in order to provide a level-playing field to all the pro spective bidders.

Third, Mr Dasmunshi has suggested that the assessed value of Air India should be internally audited by the Comptroller and Auditor General of India (CAG) before the Government can fix the reserve price and start negotiations.

``The Government should not take a decision in haste in this regard suo motu without taking Parliament and the Standing Committee on Finance into confidence,'' he said.

``All these issues will be taken up by the Congress party in some form or the other in a motion in Parliament,'' he said on the eve of the monsoon session of Parliament which gets underway on Monday.

Explaining the rationale behind his demand to call for fresh bids, Mr Dasmunshi claimed the original ground rules as enshrined in the initial draft of the shareholders agreement was changed at a later stage to ensure that a ``pre-determined chosen friend '' benefitted from this exercise.

The original draft of the shareholders agreement stated that both the Government and the strategic partner would be entitled to appoint four directors each to the Board of Directors of the privatised Air India, the Government would select and appoint thr ee independent directors, the Government would appoint the Chairman and the strategic partner would be entitled to appoint the Managing Director.

According to Mr Dasmunshi, the initial draft of the shareholders agreement was altered to provide better advantage to the sole bidder. The final draft of the shareholders agreement states that the Government will have the right to appoint only three dire ctors as against the four by the strategic partner, he said.

Besides, the appointment of the three independent directors would be made only in consultation with the strategic partner, who will also have the right to appoint both the Chairman and Managing Director.

``The complete U-turn in the shareholders agreement is vital because on the basis of the provisions incorporated in the original draft of the shareholders agreement, several of the parties who had submitted their expressions of interest decided not to co ntinue with the process because of the role of the Government post-privatisation as defined in these drafts were not acceptable to them,'' he said.

``It would not be unreasonable to conclude that the entire process has been stage-managed right from the start to drive away all the players who could have effectively competed with the Tata-SIA consortium in the bidding process,'' he said.