Dogfight over privatisation

In retrospect, it was too good to be true, the surrender too abject to be real. After his dogged resistance to privatising Air-India, suddenly aviation minister Sharad Yadav appeared to give in. And all of us, including disinvestment minister Arun Shourie, thought he’d given in thanks partly to the fact that Prime Minister Vajpayee had some tough words with him.

Actually nothing of the sort happened. Yadav was just biding his time, and he’s finally struck. Just a few weeks prior to the final bidding on Air-India, he placed Air-India’s chief Michael Mascarenhas under suspension, on charges of corruption. And simultaneously, he’s moved to appoint a favourite V.K. Verma as the Commercial Director. The same Verma was removed from the job some months ago (at the instance of the Prime Minister’s Office) when a tape surfaced of a speech of his at an official meeting that sounded awfully like active advocacy against privatisation — an irony considering that Air-India’s unions are in favour of selling the airline. Mascarenhas, by the way, was refusing to reinstate Verma despite the ministry asking him to do so, and this was a major reason for his problems with his political boss.

Mascarenhas’ shadow-battle with Yadav actually began in the middle of last year when he privately criticised the sale of ‘bilaterals’ to other airlines on the ground that this would lower the sale price of Air-India — Yadav was instrumental in selling the bilaterals which gave other airlines the rights to fly into and out of India. Mascarenhas gave the example of other airlines (Qantas, British Airways) — when they were being privatised, no fresh bilateral agreements were signed.

Now it is possible that Mascarenhas is guilty of what he’s been accused of. But the manner in which the investigation was carried out does make it seem he’s the victim of a hit-and-run job. Let’s take the case, as outlined by M.B. Sagar, the airline’s vigilance officer. According to Sagar, the General Sales Agent for Air India in London was paid excess commission for the year 1997. In the event, he wrote to the ministry of civil aviation recommending that Mascarenhas and three others be suspended — now this itself is irregular since the rules do not permit the airline’s vigilance officer to investigate the Managing Director, but that’s the least of the problems.

Sagar did not even ask Mascarenhas for his defence on the matter. And when these charges were vetted by the ministry, and an official communique was sent to the Air-India chief, he rebutted most of them. For instance, the amount of so-called ‘excess’ payment was just Rs 1.7 crore as against Sagar’s Rs 3 crore. Second, the practice of commission remained unchanged from the past; as Managing Director, in any case, Mascarenhas’ job was not to examine detailed calculations, but to ensure that the conce- rned officers down the line — the regional director in the UK, the commercial and finance directors at the head office, and so on — had okayed the proposal.

But let’s say that Mascarenhas’ defence is not worth the paper it was written on. After all, when he was placed under suspension, it wasn’t just Sagar’s report that was invoked. Sagar an appointee of the ministry could be acting on Yadav’s behest. The government also invoked a ‘report’ of the Comptroller and Auditor General (CAG) ‘condemning’ the Air-India chief. Actually, it was a draft para, and the usual procedure is to get the accused’s reply, and it is only when this reply is found to be unsatisfactory that the CAG comes up with a ‘condemnation’. The CAG para, for some reason, speaks of much more than Sagar does. It speaks of excess commissions for the entire period since 1986. How, and why, the accusation increases from one year to a 15-year period is beyond comprehension, and does smack of a hit job. But curiously Mascarenhas wasn’t given enough time to give a reply. How could he possibly have 15-years data at his fingertips?

But let’s ignore even this for the time being. What’s interesting, and embarrassing, is that Air-India’s accounts, including that of the UK operations were audited every year by the CAG — by its office in the UK and the regional office in Mumbai — but there’s been no objection raised so far! While the CAG sends letters asking for clarifications on various practices, it is only when it finds the replies unconvincing that it has what is called an ‘audit para’ in its report — there’s been no such audit para on Air-India’s UK operations. So how did the CAG suddenly decide that the last 15 years practice was shady, when it had cleared it all these years?

These are the circumstances of the Air-India’s chief’s suspension. Given that the case against him is not that cut and dried, was the ministry justified in its action? What’s curious is how Sharad Yadav’s ministry was allowed to get away with what it has, given the fact there’s been a running battle between it and the Air-India chief for so many months. Vajpayee would do well to have yet another chat with his recalcitrant colleague, preferably before the cabinet reshuffle, and try and rein him in.

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