New Delhi, April 6
In what could be described as blatant misuse of power, the Congress government led by Capt Amarinder Singh in Punjab has used tax payers’ money worth Rs 26.58 crore to benefit its own MP from Jalandhar Rana Gurjit Singh and politically influential Oswal Group of Ludhiana.
The Comptroller and Auditor General (CAG) of India in its latest report has rapped the state government for offering “faulty policy allowing one-time settlement (OTS) to profit-making units resulted in a loss of Rs 26.58 crore.
The state-owned PSIDC had entered into two financial collaboration agreements (FCAs), one with Rana Gurjit Singh & Associates in 1993 for setting up a spinning mill (Rana Polycot Ltd at Abohar) and another with Rishi Oswal & Associates in 1997 for setting up a project for manufacturing denim fabrics (Malwa Industries Ltd at Ludhiana).
The PSIDC released Rs 17.61 crore, including Rs 11.50 crore to Rana Gurjit Singh Group and Rs 6.11 crore to Oswal Group as its equity share in the projects.
As per the FCAs, Rana Polycot had to buy back shareholding of the company upon expiry of five years and the Oswal Group had to buy back equity share of the PSIDC in three stages. It was expected to buy back 15 per cent shares of the PSIDC by fourth year and 85 per cent by fifth year once the production commenced at plant.
The CAG report points out “both the collaborators failed to buy back the company’s shareholding as per the FCAs on September 23, 2001 and September 30, 2001, respectively. The company did not, however, take any action to recover its dues, despite the fact that both companies were making profit.
After assuming power, on the plea of industrial associations, the Congress government introduced OTS in the PSIDC and Punjab Financial Corporation, aiming to settle long-pending dues worth hundreds of crores with industrial units.
The CAG report wonders how the OTS, which was aimed to revive sick defaulting companies, was offered to these profit-making wilful defaulters. The PSIDC was, though, entitled to appoint its nominee as Managing Director of the unit or to sell its shareholding at the risk and cost of collaborators.
“Audit observed that OTS to these profit-making wilful defaulters lacked financial prudence. The units earned profit of Rs 8.86 crore (from 1996-2004) and Rs 28.27 crore ( from 2001-2003), respectively. Thus, offering OTS to these collaborators was highly irregular and resulted in loss of Rs 26.58 crore ( Rs 17.73 crore for first unit and Rs 8.85 crore for second unit) to the company,” noted the CAG report.
