Tuesday, Nov 25, 2014

Is this the way to energise civil servants?

The renovated Laxmi Vilas hotel, which, at the time of divestment in 2002, was spending Rs 3 crore to earn Rs 2 crore annually. The renovated Laxmi Vilas hotel, which, at the time of divestment in 2002, was spending Rs 3 crore to earn Rs 2 crore annually.
Written by Arun Shourie | Posted: September 5, 2014 12:05 am | Updated: September 5, 2014 8:04 am

CBI move to investigate the disinvestment of Udaipur’s Laxmi Vilas hotel on the basis of an anonymous oral complaint, 12 years after the decision, holds a lesson for those who are trying to get the bureaucracy going.

Hindustan Zinc was privatised in April 2002. The privatisation was challenged on various grounds in the Supreme Court. In December 2012, after hearing counsel, the SC rejected the challenge.

That did not deter the CBI. In February 2014 — TWELVE years after the disinvestment, and with HARDLY A YEAR having passed since the SC delivered its judgment — the CBI launched a new “investigation” into the disinvestment.

When its officers came to me, I asked them about the complaint on the basis of which they had commenced the investigation. They said that there had been nothing in writing, just an oral complaint!

The same pattern has now been repeated in the case of the disinvestment of Laxmi Vilas Hotel in Udaipur. The hotel was disposed of in 2002. Of the ITDC’s 20-odd hotels, this one had distinguished itself

by incurring the highest loss: to earn gross revenue of Rs 2 crore a year, the hotel spent Rs 3 crore — a loss of 51 per cent. The occupancy rate of the hotel had fallen to 26 per cent. Far from being a luxury palace, the place was in shambles — the plant and machinery were defunct, the furniture, etc were in the sorriest state that you can imagine. This will be evident from two elementary facts. ELEVEN parties expressed an initial interest in bidding for the hotel. FIVE of them carried out thorough due diligence. Such was the condition of the property that four of the five dropped out. I am informed that Bharat Hotels — the winning bidder — had to spend Rs 25 to 30 crore on renovating the place and getting its plant and machinery in working order. Furthermore, the quality of the staff was such that Bharat Hotels had to spend another Rs 3 to 5 crore on voluntary retirement schemes.

TWELVE years after the disinvestment, the CBI has registered an FIR — naming, among others, the then secretary of the disinvestment ministry and accusing him, among other things, of “dishonestly and fraudulently and with mala fide intention” doing this, that and the other. On what basis? The FIR itself states that it has been registered on the basis of “an anonymous complaint”. I will come in a moment to the utter indefensibles that mar the FIR, but the first point to consider is: Should any agency have the authority to harass civil servants for decisions taken 12 years ago? Should it have the power to ruin the continued…

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