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Rediff.com  » Business » Shourie dares govt to probe Centaur sale

Shourie dares govt to probe Centaur sale

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May 05, 2005 19:08 IST

Former Divestment Minister Arun Shourie on Thursday dared the government to hold an open enquiry into the sale of Hotel Juhu Centaur in Mumbai and alleged that Finance Minister P Chidambaram was making it an issue based on a report prepared by a "handpicked" former government official.

"I am prepared to answer any question and face any enquiry ... my appeal to the prime minister and finance minister is that the enquiry should be open," he said at a press conference, a day after Chidambaram said in the Lok Sabha that Shourie had taken "active interest" in the divestment of the hotel property for Rs 153 crore (Rs 1.53 billion).

The Divestment Development: Complete Coverage

"There is an effort to dig dirt. They appointed a retired bureaucrat S Lakshminarayanan, picked by Chidambaram, to look into divestment deals," he said during the daily media briefing of Bharatiya Janata Party in Parliament.

Demanding that the report of this official be released immediately to find out if anything "improper" had been done, he said the finance ministry itself had sent the details of this transaction, cleared by the competent authority.

While parrying questions on the difference between valuation of Rs 246 crore (Rs 2.46 billion) mentioned by the finance minister and the actual sale of the hotel for Rs 153 crore, Shourie said the government should release all three reports prepared by advisors on valuation and process of sale by joint secretaries to find out the answer.

Shourie began by saying that he quite agreed with the remarks of Chidambaram that he took "active interest" in this particular deal. "I took active interest in every little task assigned to me be it in the divestment, commerce, planning or telecom ministries," he quipped.

On Chidambaram's statement that two advisors had given two divergent figures on the value of the property and the government went with the lowest, Shourie said there cannot be a consensus on valuation.

Even some of the biggest business groups -- Tatas and Reliance -- paid a price for Videsh Sanchar Nigam and IPCL, which was much more than the value of the companies at present, he said adding these (valuation) were commercial decisions.

He also drew attention to the judgement of the Supreme Court in the Balco divestment case in which the apex court stated that that value of an asset is the amount, which the highest bidder is willing to pay.

Shourie said the recommendation to sell Juhu Centaur was made by the Divestment Commission in 1997 when Chidambaram was the finance minister.

"As the property was owned by Air-India subsidiary Hotel Corporation of India, the company did the initial work of sell-off. The divestment ministry came into the picture when the bids were being invited," he added.

He said the lone bidder had quoted the price of Rs 153 crore for the hotel for which the reserve price was Rs 101 crore (Rs 1.01 billion) and the bid was accepted.

Rebutting charges that he had helped arrange finance for Ajit Kerker-owned Tulip Hospitality, Shourie said in fact the meeting he held with the bankers was to ascertain that the buyer would pay up the quoted price.

"I could have in no way influenced the banks to lend to Tulip," he said.

He admitted that the deadline to pay up for the property was relaxed twice for the buyer but defended this by saying that the government did not want to lose the extra money that the lone bidder Tulip had quoted for the property.

"Only after getting assurance from the banks that they would support the bidder that the decision was taken not to encash bank guarantees," he said adding by encashing bank guarantees we would have got small sum of money but would have been saddled with a property which no one other than Tulip had shown interest in.

The former divestment minister said there had been media reports that Tulip had defaulted on the loans it had taken to buy Juhu Centaur and if it was true the government could direct the banks to move against the company under Securitisation Act.

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