The Hindu : TIDCO rights renunciation arbitrary: CBI prosecutor

Online edition of India's National Newspaper
Friday, Jan 09, 2004

Tamil Nadu

Tamil Nadu

TIDCO rights renunciation arbitrary: CBI prosecutor

By Our Special Correspondent

CHENNAI, JAN. 8. The final order on the number of shares on which the Tamil Nadu Industrial Development Corporation (TIDCO) had to renounce its rights and the price at which that had to be done was that of the then Chief Minister, with which nobody could disagree in view of her position, the prosecution submitted in its final arguments before a Special Court in ``SPIC (Southern Petrochemical Industries Corporation) disinvestment scam'' case.

In his written arguments before R.Rajamanickam, the Special Judge-I, N. Ranganathan, Special Public Prosecutor of Central Bureau of Investigation submitted that the decision to renounce the TIDCO's rights in the SPIC's Zero Conversion Bond (ZCB) was taken arbitrarily in pursuance of the suggestion put forth by the then Industries Secretary, C. Ramachandran. It was immediately accepted by the Chief Minister and sought to be implemented.

In March 1992, Ms.Jayalalithaa personally made an endorsement in the file, specifiying the price and the total amount to be received from the co-promoter. The endorsement was an approval of the note put up by the then Industries Secretary.

The allegation is that Ms.Jayalalithaa (cited as first accused) and Mr. Ramachandran (second accused) abused their official position to favour M.A. Chidambaram (since deceased) and his son, A.C. Muthiah (third accused), to bring back Chidambaram as SPIC Chairman and to relinquish the TIDCO's rights in the ZCB resulting in loss to Government.

The prosecutor submitted that the renunciation decision was taken by Mr.Ramachandran and the Chief Minister without consulting anyone.

It was the first time the TIDCO was directed to renounce its rights and there was no guideline on how valuation for renunciation had to be done.

V.S. Chandralekha, then Chairperson and Managing Director, TIDCO, had sought sanction of an interest-free ways and means advance of Rs.12.71 crores for the government undertaking to subscribe to the ZCB. But there was no response from the Government. Mr. Ramachandran was posted as Industries Secretary in pursuance of an agreement of minds among the accused. The defence theory that the SPIC's share prices crashed and hence the renunciation decision was taken was only an opinion.

It was on record that the prices were on the uptrend. The proper method of bond pricing was to take the average of the prices for three months prior to the SPIC's letter of offer. But it was not adopted. Before Mr.Ramachandran became Secretary, he did not suggest change of SPIC chairmanship. After assuming the post, he brought about the change.

It was he who mooted the idea of renunciation of rights knowing full well that the TIDCO had not resorted to such a step in any of the companies it promoted. The renunciation decision was contrary to the Government's policy on major industries for 1989-90 since the policy did not favour disinvestment of shares in flagship companies such as SPIC, the prosecutor said.

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