Ask PC, Pranab too about delay in VSNL landdemerger: Shourie

Written by Rishi Raj | Anandita Singh Mankotia | New Delhi | Updated: Mar 23 2011, 07:56am hrs
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Former disinvestment and telecom minister Arun Shourie on Tuesday put the blame for the delay in demerging the 773-acre surplus land of VSNL (now Tata Communications) on the UPA government, particularly its two heavyweight ministers, home minister P Chidambaram (who was earlier the finance minister) and current finance minister Pranab Mukherjee.

In an interview to FE, Shourie said, If there has been a delay and a costly delay, well, have an inquiry against them (Chidambaram and Mukherjee). On his part, responding to an inquiry ordered by telecom minister Kapil Sibal into the delay, Shourie said, If they will call me, I will go and tell what happened and say ask the rest from Chidambaram and Mukherjee.

Shourie said that when VSNL was disinvested in 2002, stringent guidelines were put in the sale clause wherein no benefit would accrue to the bidder from the demerged land and its sale or any form of revenue and shareholding in the resultant company. Then came the matter of transferring the land. VSNL said that if it transfers (the land), it will have to pay a stamp duty of R500 crore. It said, and logically so, that when it is neither the owner of the land nor will it be its beneficiary in any form, why should it pay the stamp duty We referred the matter to the finance ministry, which was headed by Jaswant Singh then, because this was the competent ministry to deal with matters relating to stamp duty. After this a new government came to power (UPA). I have been told that the Tatas (the new owners of VSNL) have been writing to the government on the matter since 2005-06 but nothing has happened so far.

Asked why the demerger was not done before disinvesting the company, Shourie said that it was not possible.

VSNL was a listed company. It is even listed on the New York Stock Exchange. Stripping off its land from the company before selling it off would have been objected by the shareholders, who may have called it nationalising the company. They could have gone for litigation, which would have blocked the entire sell-off process. Therefore, the idea came to sell the services part of the company and not the land, he said.

Accordingly, PK Basu, who was then the joint secretary in the disinvestment ministry, drafted the sale agreement, putting in stringent clauses ensuring that all the surplus land would go to another company and the bidder who acquires the stake in VSNL cannot purchase shares in the new company that owns the land. The new company will have the exact shareholding that VSNL did before disinvestment. Even in a scenario in which the government divests its 26% stake in VSNL, its rights shall continue to be undisturbed in the newly-carved company which owns the surplus land bank. Finally, in case the new company is not formed due to some reasons, then the entire proceeds from sale, rent, lease or any other activity shall accrue to the government, Shourie said.

He said that the cash reserves of VSNL did not go to the Tatas as there was 750% special dividend paid by the company to the government before the sell-off. Shourie said that VSNL enjoyed monopoly in international long-distance calls till 2004, which was ended by the government two years in advance (2002), so in effect this was a loss for the Tatas. To his critics saying that VSNL was sold in haste, Shourie said, It took two years. How much more time do you think should it have taken Also, money is made in delaying things not in implementing.