CPI(M) For CBI Probe Into Centaur Hotel Scam

THE CPI(M) has demanded a CBI inquiry into the sale and resale of Centaur Hotel, Mumbai, in the light of the adverse remarks made by the Comptroller and Auditor General of India (CAG) in its latest report revealing a loss of Rs 145.69 crore to the exchequer in the deal.

Addressing a press conference at the AKG Bhavan on February 19, CPI(M) Polit Bureau member, Sitaram Yechury, said the CAG report vindicates all the charges made by the CPI(M) concerning this deal. “It confirms our fears that a lot of underhand deals were struck. It is a classic sweetheart deal, where public property was sold at a low price to a person close to the ruling establishment”, said Yechury. Responding to a question, he said the Party, along with other likeminded forces would build a public campaign focussing on the “scam growth” under NDA regime “where selling of public assets at throwaway prices has become a sophisticated art.”

CPI(M) floor leader in Rajya Sabha and chairman of the parliamentary standing committee on civil aviation, Nilotpal Basu, demanded the disinvestments minister Arun Shourie to respond to the findings of the CAG. Arun Shourie had dismissed the opposition charges regarding these deals as “fabricated” during a discussion in parliament.

It may be recalled A L Batra of Batra Hospitality Private Limited (BHPL) was the beneficiary of the government’s disinvestments spree – buying the Centaur Hotel for Rs 83 crore and within six moths reselling it for Rs 115 crore, making a neat profit of Rs 32 crore. Nilotpal Basu charged that Batra has connections with the RSS. The CPI(M) and other opposition parties had objected to this blatant loot of people’s property. The Vajpayee government typically took the stand that legally Batra had a right to resell.

The CAG has now pointed out that because of the undercharging of lease rent and deduction of turnover levy in the sale of the hotel, there has been a revenue loss of  Rs 145.69 crore to the exchequer.

Yechury said the demand for CBI inquiry was being made despite doubts about the pressures the agency would face functioning under the prime minister and the deputy prime minister. Basu said as the CBI was “overactive” these days investigating charges against Mayawati, Shibu Soren etc, it should investigate the Centaur deal also.

Following is the text of the press note circulate at the news conference:

CAG’s report laid in the last session of Parliament revealed loss of Rs.145.69 crore in revenue because of undercharging of lease rent and deduction of turnover levy in the sale of government owned Centaur Hotel, Mumbai, of  Hotel Corporation of India to Batra Hospitality Private Limited (BHPL) on April 18, 2002.

In this connection it may be recalled that the issue of resale of the same hotel within six months of its sale in October 2002 at a premium by BHPL created a furore when the same was reported by the media. The government was not aware that BHPL which had purchased  the hotel at a cost of Rs 83 crore resold the same reportedly at a price of Rs 115 crore. The issue was raised in the winter session of the parliament in 2002. During a marathon discussion on disinvestment of PSUs in Rajya Sabha on December 4, 2002 there were serious charges about this transaction and the question of reduction in turnover levy was specifically questioned. There was a demand for CBI inquiry into the whole transaction from the House, including NDA allies. The minister of disinvestment dismissed the charges as fabricated and did not respond to specific charges of acts of omission by the government in the whole deal favouring one single individual i.e. Shri A L Batra, the owner of BHPL.

Subsequently the Parliamentary Standing Committee on Transport, Tourism and Culture took up the issue and in its 65th Report to the Parliament presented on March 10, 2003 recommended inquiry by Central Vigilance Commission on the following specific issues:

1. Selection criteria

2. Reduction turnover levy

3. Rebidding process and

4. Transfer of an IOC petrol pump in the hotel to BHPL without the knowledge of IOC

Government did not take any action on the recommendations. The debate in the parliament and the Standing Committee’s Report had highlighted how a public asset was sold at a throw away price to help a single bidder. It can be mentioned that both the bids, namely the first bid which was rejected as the price quoted was below the reserve price as well as the second bid when the turnover levy was reduced from 6 per cent to 2 per cent, were restricted virtually to one bidder who is alleged to be close to Sangh Parivar. There was no open bid even when the tender condition was changed through reduction of turnover levy. CAG report has now confirmed that Rs 145 crore revenue to public exchequer has been squandered away for a deal of Rs 83 crore. In the process Shri Batra coolly got away with a premium of Rs 32 crores within six month through resale.

Disinvestment minister as and when confronted with such cases of under valuation of public sector units (like BALCO, Modern Food, etc) had taken the cover of a check audit by CAG. The country has not yet seen a single such check audit report so far and CAG’s report on Centaur Hotel clearly shows the magnitude of the disinvestment scam in totality. We therefore demand immediate CBI inquiry by the government on the sale and resale of Centaur Hotel, Mumbai Airport so that the rising “scam growth” under NDA regime where selling of public assets at throw away prices has become a sophisticated intellectual art, is exposed at the earliest.