The Finance Ministry has floated a new monitoring body, sans teeth -- to oversee transparent disinvestment process in the future in the PSU stake sale, however, its recommendations will not be binding on the DoD decisions.
“The disinvestment process will be monitored by this body and we are in the process of finalising it,” said Alok Tandon, Department of Disinvestment (DoD), Ministry of Finance.
However, the recommendations of the body called the Independent External Monitors -- will not be binding and the Finance Ministry has the right to accept or reject it. This, raises the question on how much of teeth the body will have even as the government has floated a new body for monitoring transparency of the future disinvestments.
The decision also comes at a time when the election process has already started and the body will come into force in the new regime. Replying to queries as to why the decision has come at this time, source said:” the process had already initiated last year and it was in the making.”
The body is to comprise of former bureaucrats, senior officials of the management level and eminent persons and even the private sector however, their appointment will have to be whetted by the CVC. Initial tenure of the IEMs would be three years and could be further extended for another two years, DoD sources said. The body will monitor the disinvestment process of the PSUs including the agencies that are hired to manage the stake sale. “The positions will be equivalent to the rank of joint secretary,” said sources.
“The entire process of disinvestments starting from bidding to the selection of the merchant bankers and financial agencies will undergo monitoring through the IEMs,” said sources in the DoD.
The names of the IEMs will be sighted in the integrity pact to be signed between the department and intermediaries appointed, like merchant bankers and the legal advisors for every public issue.
The integrity pact, as per CVC, essentially envisages an agreement between the prospective vendors and bidders and the buyer not to indulge in any corrupt practices during the contract period. The CVC has emphasised the necessity to adopt Integrity Pact in government organisations. The Commission had also directed that in order to oversee the compliance of obligations under the Pact, by the parties concerned, Independent External Monitors (IEMs) should be nominated with its approval.
It may be recalled that the government has pegged the target of Rs40,000 crore for disinvesment in the vote-on-account for 2014-15 presented by Finance Minister P Chidambram on February 17. last week, the Government made an entry into the ETF ( exchange traded fund) for its ten CPSEs disinvestment which mopped up collections of Rs4000 crore and helped the Government achieve the disinvestment target of Rs3000 crore.