Ever since the Centre went in for strategic sale of public sector units (PSUs) — beginning with Modern Foods in 2000 — allegations have been rife about disinvestments at prices much below the market value of the companies’ assets. The political parties in opposition have variously termed the sale of PSUs, particularly profit-making ones, as “loot of national assets”.

At least four cases lend credence to these accusations. Then Attorney General Soli Sorabjee in January 2003 created a controversy by advising the disinvestment ministry to divest its shares in HPCL and BPCL without seeking parliament’s consent. Nearly 100 Supreme Court lawyers, in a petition to the prime minister, stated that the Centre had ‘malafide intention’ in seeking the AG’s opinion. The reference was to AG Milon Banerjee’s stance in 1993 that the two oil companies had been created by acts of parliament, and the government could not sell its stakes unless the acts were amended. The apex court, in September 2003, restrained the Centre from going ahead with the privatisation of the companies.

In February 2004, the CPI(M) demanded a CBI probe into the sale of Centaur Hotel, near Sahar airport, following a CAG report of a Rs145.69-crore revenue loss in the deal. Batra Hospitality, the company to which Centaur was sold, bought the hotel for Rs83 crore, but resold it within months to the Sahara group at a premium for Rs115 crore. A parliamentary standing committee found several flaws in the deal — a major highlight being the transfer of a petrol pump along with the hotel, which was outside the jurisdiction of the disinvestment ministry.

Controversy also dogged the sale of the Centaur Hotel at Juhu to Tulip Hospitality Services. It turned out that Ajit Kerkar, Tulip’s promoter, was a member of the Air India Board when the decision to divest AI’s stake in its subsidiary, Hotel Corporation of India (owners of Centaur) was taken. Following the decision, Kerkar quit the board. The seller later became the buyer.

Questions have been raised on the background of PSU buyers. In the case of disinvestment in Jessop India, the EMU coach building company in West Bengal, the buyer, Ruia Cotex, owed money to IDBI. The question is, how can companies that default on bank loans finance future acquisitions?

In retrospect, the government’s backtracking on Neyveli Lignite — though the cause was workers’ protests — is just one failure in a long list of controversy-laden successes.