The Telegraph
Since 1st March, 1999
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Foul-play stench in Centaur deal

New Delhi, March 10: A standing committee of Parliament today called for a Central Vigilance Commission probe into the sale of Centaur Hotel Mumbai Airport after pulling up the government for sitting through a series of bidding violations in the deal.

The panel feels restrictive clauses in the bidding process left many suitors out, and that the use of the special purpose vehicle (SPV) arrangement by the Batras “raises serious questions on the intentions of the buyer”. The committee’s report was placed in Parliament today.

The 288-room property at Mumbai airport was the first to be set up by the Hotel Corporation of India, a public limited company wholly-owned by Air-India. The hotel, sold by the government to Batra Hospitalities for Rs 83 crore, was re-sold to the Sahara group for Rs 115 crore.

The committee feels the ground rules for participating in the bidding process for HCI properties were restrictive because they allowed only hoteliers into the fray. As a result, the market for HCI properties could not be fully explored and those ready to offer better prices could not enter the bidding process.

“Using Batra Hospitalities as an SPV raises serious questions about the intentions of the buyer,” the committee said. It suspects that the mechanism was part of a pre-meditated plan to sell the hotel after acquiring it. The argument is that transferring 100 per cent from AL Batra to another firm does not amount to a sale.

The committee feels the AL Batra group had not spelt out clearly who would finally purchase the hotel when it was bidding for it. It had taken an ambiguous stand even in the re-bidding process during the re-bidding. “If the bid succeeds, an appropriate structure will be adopted,” it said in a letter written in January last year.

However, Attorney General Soli Sorabjee gave the deal a clean chit, saying there was no breach of law in the way Batra Hospitality sold Centaur hotel to Sahara India.

An official statement from Batra Hospitality also quoted the Attorney General’s position to back up its case that there was nothing improper in the transaction.

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