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By Ravi Nair Abir Dasgupta , Paranjoy Guha Thakurta
In a major move, the Ministry of Finance has introduced new guiding principles for the government of India’s disinvestment deals. The Probe has accessed an office memorandum signed by Aseem K Jha, the Under Secretary to the Government of India, which elaborates on the “guiding principles” to be followed during the disinvestment process to bring in the “highest degree of integrity and probity” in the transactions.
The government’s document on the “guiding principles” states: “Due diligence on qualified bidders including security/political clearance: A security/political clearance of qualified bidders, if necessary from national security angle/FDI Policy angle, may be obtained, based on necessary disclosures from bidders, from the relevant Ministries through the Administrative Ministry. Due diligence on other aspects (status of NCLT/NCLAT/court cases involving such bidders, SFIO concerns etc.) regarding the qualified bidders may also be carried out by the TA/ LA during the process.”
The footnote states: “Cases that would cast a doubt on bidder’s ability to close the transaction or manage the Companies when it is disinvested or relating to winding up/insolvency/liquidation proceedings, striking off proceedings under section 248 of the Companies Act, or other proceedings of a similar nature or default, if any committed by a company in the matters of repayment of debentures/deposits under section 71, 73-76 of the Act…”
The disinvestment of Pawan Hans came under much scrutiny after it was exposed that the government of India did not follow appropriate legal and technical scrutiny of the successful bidder. In the past, another disinvestment deal of the government had come under legal scrutiny after allegations were raised against the reputation of the winning bidder. In January this year, the government pulled the brakes on the privatisation of Central Electronics Limited (CEL) after its employees’ union moved court against the sale of the company to a little-known firm which had alleged links to some members of the ruling party.
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