Sellout At Juhu

Now begins the public washing of the NDA's dirty linen. An Outlook exclusive in itsJuly 19 issue on the disinvestment of the Centaur Hotel, Juhu Beach, in Mumbai has stirred up a hornet's nest in political circles. Outlook had printed detailed minutes of meetings and correspondence to establish that at every stage the disinvestment of the prime six-acre property to Ajit Kerkar's Tulip Hospitality Services was dubious. The property was sold for a mere Rs 153 crore while the market value is estimated at over Rs 350 crore.

The Centaur deal has become part of the public record in the Lok Sabha. A calling attention motion has been listed which means that the disinvestment will come up for discussion in the course of the ongoing session of Parliament. Meanwhile, Outlook has learnt from highly placed sources in the government that the sale will be reviewed. An inquiry is likely to be ordered and if the suggestion of wrongdoing is proven, the finance ministry could consider terminating the deal.

As the lid blew off the highly questionable deal, there was a furore in both houses of Parliament last week. MPs of the Left parties were particularly incensed, with the CPI(M) even calling a press conference to demand a cbi inquiry or an investigation of the entire deal through the Central Vigilance Commission (CVC).

Outlook has now acquired fresh documents proving that till 2000, the Juhu Centaur was actually making profits. In 2000, its net profit was Rs 4.05 crore. It was only after the process of disinvestment started that the hotel began accruing losses! In 2001, it made a loss of Rs 1.56 crore. By 2002 (the year it was sold), the losses mounted to Rs 7.27 crore. Corporate houses no longer entered into long-term arrangements with a hotel on sale. There was also the curious withdrawal of business by public sector companies, including Air-India. This was ironical as the Centaur was then owned by the Hotel Corporation of India (HCI), a subsidiary of Air-India.

Also, 3,010 square metres of the property sold to Tulip was owned by the Maharashtra government but was included in schedule 'A' of the sale deed between HCI and Ajit Kerkar's Tulip Hospitality Services. Z.Z. Zende, Mumbai suburban district collector and the custodian of the land, is on record that even the Maharashtra government cannot sell the land. This because it is too close to the sea and its sale would violate environment laws. Outlook has learnt that this aspect of the sale has also been brought to the notice of the finance minister.

Though the Left is leading the charge, many Congress and Shiv Sena MPs have expressed misgivings about the deal. What has outraged the Left is the fact that the disinvestment ministry appears to have gone out of its way to ensure that public sector banks gave loans of over Rs 100 crore to a company whose net worth was Rs 5.05 crore. Outlook had published the minutes of a meeting in which then-disinvestment minister Arun Shourie met several public sector banks who agreed to give loans to Tulip Hospitality.

Says Dipankar Mukherjee, CPI(M) MP: "If this sale is not reviewed, it will institutionalise the use of public sector funds to sell off public assets to private parties." According to him, the most controversial aspect of the Centaur sale was that the loans were only cleared after the sale agreement was executed. "This creates an impression that the banks only cleared the loans because the minister intervened on behalf of Tulip," he says. The Left MPs also insist this deal involves "blatant fraud and corruption". Asks CPI(M)'s Basudev Acharya: "Why is Mr Shourie, who sees himself as a crusader and conscience-keeper, keeping quiet?"

A further twist in the tale is added by the fact that the Juhu Centaur and the Airport Centaur in Mumbai were the only profit-making units owned by HCI Both were controversially sold off. But the Centaur Delhi, Centaur Lake View in Srinagar and the Chefair flight kitchens in Delhi and Mumbai are all loss-making units still being run by HCI. Somewhere along the way, it seems, it was forgotten that the disinvestment process was originally designed to slough off loss-making public sector units.