Atal Bihari Vajpayee, Arun Shourie cleared hotel sale, says ex-disinvestment secretary Pradeep Baijal

NEW DELHI: A day after the CBI booked him for alleged cheating in the sale of ITDC-owned Laxmi Vilas Palace hotel in Udaipur to a private company for a pittance, former disinvestment secretary Pradeep Baijal said on Friday that "all decisions regarding disinvestment were taken by then disinvestment minister Arun Shourie and the Cabinet committee on disinvestment (CCD), headed by former Prime Minister Atal Bihari Vajpayee".

Speaking to TOI over phone, Baijal said, "The decision regarding the sale of Laxmi Vilas Palace was done after following a proper process".

Regarding the disinvestment of the Udaipur-based hotel, Baijal said, "There was valuation of property, which was done by a valuer, then there were investment bankers who did the re-evaluation following which the file was scrutinized at different levels, including by a committee of secretaries and, finally, by the Cabinet Committee on Disinvestment".

He said the file had signatures of everyone who was part of the decision. The Cabinet panel had reportedly, in a meeting on February 5, 2002, approved the disinvestment of Laxmi Vilas Palace, estimated to be worth Rs 151 crore to the highest bidder Bharat Hotels for just Rs 7.52 crore.

Asked about the CBI FIR against him, Baijal said he had "nothing to comment on it as it has been 12 years since the decision was taken and everything was done according to procedure".

On the other hand, CBI director Ranjit Sinha said the agency's FIR was registered after thoroughly pursuing an enquiry for several months. "The FIR has been registered after we found that Laxmi Vilas was undervalued even according to the rates of that time. We are not probing disinvestment policy of government. The issue is that there were problems with the valuation," Sinha told TOI.

Baijal retorted, saying, "I didn't value the company/hotel."

CBI said it would soon question Baijal after examining officials who were part of the process and officials of Bharat Hotels and the valuation company.

The agency has said in its FIR that Laxmi Vilas Palace hotel, spread over 29 acres with an estimated value of Rs 151 crore, was sold to Bharat Hotels for Rs 7.52 crore causing loss to the exchequer. Apart from Baijal, those named in the FIR include Ashish Guha, the then managing director of Lazard India, and Kantilal Karamsey Vikamsey, owner of valuation company Kanti Karamsey and Co and authorized representative of Bharat Hotels, owned by Jyotsna Suri.

"It was alleged that during the period 2001-02, Laxmi Vilas Palace hotel, Udaipur, a heritage hotel and one of the units of Indian Tourism Development Corporation (ITDC), department of tourism ... with 54 rooms with all accessories was first drastically undervalued and then sold/disinvested to a private hotel situated at Barakhamba Road, New Delhi, at a price of Rs 7.52 crore," said a CBI officer.

The officer said as per the then rate of land in the area where the hotel was situated, its value was Rs 151 crore. The reserve price was set at Rs 6.12 crore.

On February 5, 2002, the Cabinet committee on disinvestment had approved disinvestment of three ITDC-owned hotels — Qutab Hotel and Lodhi Hotel in New Delhi and Laxmi Vilas Palace Hotel in Udaipur.

Between 1996 and 2001, the occupancy of Laxmi Vilas Palace had reportedly come down from 41% to 26% and the hotel was facing heavy losses. The net profit margin reduced from 34% to (-)51%, leading to the government's decision of disinvestment. As part of the disinvestment policy during the NDA regime, several state-owned hotels were auctioned to private parties.