The Hindu : National : `Discomforting aspects' to Centaur Hotel disinvestment

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Thursday, Aug 19, 2004

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National

`Discomforting aspects' to Centaur Hotel disinvestment

By Our Special Correspondent

NEW DELHI. AUG. 18. The Union Finance Minister, P. Chidambaram, today said there were "discomforting aspects" to the previous Government's sale of the Centaur Hotel in Mumbai and assured a probe if the Comptroller and Auditor-General (CAG), currently examining the transaction, found anything amiss. The Government would ask the Civil Aviation Ministry to conduct an inquiry if the shareholders' agreement had been violated in the post-disinvestment period.

"It appears that the then Government was driven by the zeal to disinvest and overlooked some discomforting aspects of the transaction. We will wait for the CAG report and take further steps to address some aspects of the transaction," he said. He was replying to a calling attention motion. "My discomfort emanates from the fact that prudence dictates that one should not pursue a single bidder. You should have advertised [for the bids] again but the records suggest that no one raised this point," he observed.

Single bid

Replying to the concerns expressed by members, including two Disinvestment Ministers of the previous Government, Arun Jaitley and Arun Shourie, Mr. Chidambaram went through the mechanics of the sale and felt "indulgence was granted" to the bidder through repeated extensions, refraining from twice invoking the bank guarantees and closing the transaction after "an unusual meeting" with the bankers. Pointing out that Centaur Hotel was profit making till 1999-2000 and had made a small loss the next year before being put on sale, he said "maybe, the decision to disinvest was right but the situation was not so desperate as to pursue a single bid."

Mr. Chidambaram disputed Mr. Shourie's claim that in the Balco disinvestment case, the Supreme Court had approved the evaluation of public sector units through the discounted flow method.

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