Kolkata: The Enforcement Directorate has launched a probe into the disinvestment of Metro Dairy by the West Bengal government two years ago, laying the ground for a possible fresh confrontation between the Mamata Banerjee-led Trinamool Congress government and the central government of Prime Minister Narendra Modi.
The state government, in August 2017, sold its 47 per cent stake in Metro Dairy to its partner Keventer Agro Ltd — the sole bidder — for Rs 85.5 crore. Keventer Agro already owned the other 53 per cent.
The ED started a preliminary inquiry on the basis of complaints and a Public Interest Litigation (PIL) filed in the Calcutta High Court by Congress leader Adhir Ranjan Chowdhury in 2018. Chowdhury has accused the government of undervaluing the company when it was sold.
The ED also suspects possible money laundering as Keventer raised funds from a Singapore-based private equity player immediately after conclusion of the deal.
The probe comes at a time when Banerjee has been fighting a battle against the Modi government on disinvestment, which has given her political rivals in the state, the Left and the Congress, ammunition to turn up the heat on her government.
Metro Dairy was set up as India’s first public-private partnership project in the dairy sector in 1996 under Phase-3 of Operation Flood, between the West Bengal Milk Producers’ Federations, Keventer Agro and the National Dairy Development Board. The NDDB later sold its 10 per cent stake to Keventer Agro.
But after the 2017 disinvestment, complaints to the ED said Keventer had offloaded 15 per cent of its shares to a Singapore-based private equity firm.
Chowdhury, now the leader of the Congress party in the Lok Sabha, then filed a PIL. “The state cabinet led by the chief minister is involved in the process of disinvestment of a profit-making organisation. The company was undervalued when it was sold. I demanded a central probe into the deal. I will again file all necessary affidavits in August,” he told ThePrint.
Mayank Jalan, chairman and managing director at Keventer Agro, was unavailable for comment. However, a source in the company said “vested interests” were creating “unnecessary confusion” about a straightforward deal where two separate entities were involved.
The source said the disinvestment of Metro Dairy was done after due diligence by the authorities, and Keventer Agro, being a large food processing business, had attracted private equity funding independent of the deal. The shares that were sold were of the parent company, which is a separate entity, and the source added that facts and figures mentioned in the petition were wrong.
The ED is still in the process of verifying documents from all concerned departments of the state government, including finance and legal.
Malay Ghatak, West Bengal’s law and labour minister, assured that the government would cooperate fully with the agency. “We have documents in place. It’s a government procedure. We have not yet been contacted by the ED, but we will furnish details as and when required,” he told ThePrint.
Mamata govt’s stand on disinvestment
There’s a bigger question at play, about the Banerjee government’s stand on disinvestment in general and the Metro Dairy sale in particular.
On Monday, CM Banerjee wrote to Prime Minister Narendra Modi, requesting him to “stall and reverse” the process of corporatisation and privatisation of all ordnance factories. The Ordnance Factory Board is headquartered in Kolkata, and she said there hadn’t even been an “iota of stakeholder consultations” until now.
On 11 July, the West Bengal assembly also passed a resolution against the central government’s decision to initiate privatisation of central public sector enterprises, and demanded that it be revoked immediately. The motion was jointly moved by the ruling Trinamool Congress and opposition parties, including the CPI(M) and the Congress.
However, during the discussion, a senior CPI(M) leader reminded the ruling party about the Metro Dairy disinvestment.
Two days earlier, the Left and Congress MLAs had staged a walk-out from the assembly to protest against the Speaker’s refusal to allow an adjournment motion on the divestment of Metro Dairy. The CPI(M) moved the motion seeking a discussion on the sale of the government’s stake, but minister Ghatak called it a “politically motivated” move.
Quizzed about his party’s exact stand on disinvestment and the Metro Dairy sale, Ghatak said: “We will give our legal opinion on this whenever it is sought. But as far as disinvestment is concerned, our government did not privatise government companies, barring a few cases. Instead, we have taken over private companies like Dunlop and Jessop. We are paying over thousand workers every month.”
On Tuesday, Ghatak held two meetings in the offices of Air India and Bengal Chemicals to stop any process of privatisation. “Didi (Banerjee) has instructed us to spearhead a movement against all kinds of privatisation,” he said.