Transparency must in sell-off process

Still, there hasn8217;t been another case in recent memory where the Attorney General8217;s AG opinion is challenged and contested, not merely by a hundred of his peers, but also by four judges, a former law minister and the former Disinvestment Commission chairman.

The issue: Sorabjee8217;s advice to the Disinvestment Ministry that the government could divest its holding in the two oil companies, HPCL and BPCL without seeking consent from Parliament, even though both companies were created by parliamentary legislation.

Sorabjee8217;s considered opinion and the government8217;s handling of the sale of shares in public sector undertakings has shifted the controversy from that of politicians trying to hold on to their PSU fiefs, to one of transparency and honesty of government8217;s procedures and actions.

There are two aspects to sale of oil companies. The first, raised in a petition to the Prime Minister by nearly a hundred Supreme Court lawyers asks why the AG8217;s opinion was sought in the first place. They allege that Sorabjee8217;s predecessor Milon Banerjee had opined, as early as 1993, that companies created by parliamentary acts could not be privatised without parliamentary approval.

The lawyers suspect 8216;malafide intention of the central government8217; and 8216;sinister design8217; in obtaining the opinion. The AG8217;s view was refuted in detail by former Disinvestment Commission chairman G.V. Ramakrishna.

However, with the public statement from Justices V.R. Krishna Iyer, O. Chinappa Reddy, P.B.Sawant all retired judges of the Supreme Court, Justice Rajinder Sachar retired Chief Justice, Delhi High Court and former Law Minister Shanti Bhushan, the government8217;s path seems to be properly blocked.

The jurists8217; statement expresses surprise at the AG8217;s view that parliamentary enactments by which erstwhile private oil companies 8212; ESSO, Burmah Shell and Caltex8212; were nationalised do not specifically prohibit the government from privatising them or selling government equity to private companies.

They say that the preamble of the original enactments taking over the assets of the oil companies clearly spelt out the legislative policy and the objective of nationalisation. It says that the companies 8216;should be acquired in order to ensure that the ownership and control of the petroleum products are distributed and marketed in India by the said company are vested in the State and thereby so distributed as best to subserve the common good8217;.

The scheme of the enactments is clear. It mandates that the oil distribution business be vested in the State, although it could be through a government company.

The jurists say, 8216;it would be absurd to suggest that the government could undo the parliamentary mandate by just selling the shares of the government company and thus privatising it.

In our opinion these oil PSUs could only be privatised by means of express parliamentary enactments, by either amending the earlier Acts or by bringing in a new Act and repealing the earlier enactments.

Any other way of doing it would run counter to our constitutional scheme in which the executive cannot go against the will of Parliament8217;.

According to them, 8216;the government8217;s decision to bypass Parliament on a matter of such public importance also militates against Constitution a propriety and the supremacy of Parliament8217; and go on to warn that 8216;it shows an unhealthy contempt for Parliament and Constitutional norms8217;.

With such a strong view on the modality of disinvestment and the looming threat of war with Iraq, the oil company disinvestment is clearly on the back burner. But the controversy over disinvestment does not end here.

The sale of the Centaur Hotel has also taken a predictably ugly turn. A parliamentary standing committee has found several flaws in the Civil Aviation Ministry8217;s clearance of the bid by Batra Hospitality Services. Batra acquired Centaur Hotel by bidding through a Special Purpose Vehicle SPV and within weeks of the purchase sold the SPV to the Sahara Group at a hefty profit of Rs 32.5 crore.

The committee has found fault both with the evaluating the financial bids, the dilution of turnover fees payable to the Airport Authority of India and the transfer of a petrol pump along with the hotel.

In this case too, Batra Hospitality has reportedly issued a statement saying Sorabjee did not find fault with the deal and a change of the company8217;s name did not violate the sale agreement with the government.

A new dimension to the controversy may soon be provided with the Sahara Group deciding to 8216;lease8217; the other Centaur Hotel Juhu from Ajit Kerkar8217;s Tulip Hotels. Informed circles insist that the 8216;lease8217; is only a cover for Sahara8217;s acquisition of the hotel.

After all, the group cannot get a better management for the hotels than Kerkar, who is an internationally reputed hotelier. The oil company sale as well as the Centaur controversy has questioned the very transparency of government8217;s disinvestment procedures.

Add to this, the fact that Indian Petrochemicals Corporation IPCL is turning into exactly the monopoly that the erstwhile Disinvestment Commission had apprehended that it would be, and we have a extremely messy situation. Yet, India8217;s best minister heads the Disinvestment Ministry, and nobody surely is pointing fingers at him.

But doesn8217;t this mean that the Minister received some terrible advice? It is in national interest to find out how and why things went so wrong and who were the persons responsible. Moreover, if a Minister of unimpeachable reputation can become the victim of bad advice, they how much worse can things get with someone else in charge?

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