Dasmunshi flays AI disinvestment

By Our Special Correspondent

NEW DELHI, JULY 22. The Congress leader, Mr. Priya Ranjan Dasmunshi, today called for appointment of a fresh independent global adviser for disinvestment of Air India while scrapping the present process. He also urged the Government to invite fresh bids for disinvestment while clearly stating the conditions and policies regarding the ultimate management control in the shareholders' agreement.

Mr. Dasmunshi who alleged a nexus between the present global adviser, JM Morgan Stanley and the sole bidder left for Air India disinvestment, the Tata-Singapore Airlines consortium, said that the arrangements with this adviser should be immediately terminated and the exercise should begin afresh. Addressing a press conference, he said the presence of the global adviser's chairman on the Tata group's India Hotels board for a brief period pointed to a conflict of interest. ``Quite clearly, sensitive information must have been passed from them to the Tata consortium because of the close relationship that they have already demonstrated,'' he said.

In a letter sent yesterday to the Disinvestment Minister, Mr. Arun Shourie, he has suggested that the assessment of valuation should be internally audited by the Comptroller and Auditor General (CAG) in order to ultimately decide the reserve price before negotiations begin. In addition, he has called for the shareholders' agreement including the valuation of Air India to be given to the Parliamentary Standing Committee on Finance for its views.

He maintained that the current single bidder approach for AI disinvestment would pave the way for underevaluation of the public sector company. He felt AI was worth Rs. 9000 to Rs. 10,000 crores as against the reserve price of Rs. 2000 crores fixed by JM Morgan Stanley. Mr. Dasmunshi pointed to the fact that the Government has now decided to appoint two more merchant bankers to carry out independent valuations of AI. ``Obviously this decision portrays lack of confidence about the objectivity of an impartiality of the global adviser, JM Morgan Stanley,`` he said and added that he had earlier expressed doubts on the issue in a letter to the Prime Minister on July 2.

The Congress leader sought to highlight the issue of the changes made to the shareholders' agreement and the share purchase agreement at this late stage of the disinvestment exercise after discussions with the short-listed bidders. This was important because it was on the basis of the original draft that some companies decided not to continue with the process because the role of the Government in the post-privatisation phase as defined in the draft was not acceptable to them.

He said the changes now made in the agreement envisage that the Government will have the right to appoint only three directors as against four by the strategic partner. The earlier draft said both Government and the strategic partners could appoint four directors each to the AI board. Similarly, now the Government will have to consult with the strategic partner before appointing the three directors while earlier it had sole discretion in these appointments.

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