Pawan Hans Investigation | The Probe Impact

Pawan Hans Investigation Impact: Government Decides to Revamp Bidding Process for Disinvestment of Public Assets

In a three-part series, the Probe’s Ravi Nair, Abir Dasgupta, and Paranjoy Guha Thakurta revealed the glaring discrepancies in selecting the winning bidder for the disinvestment of the government-owned helicopter service provider Pawan Hans Limited. The Probe has learnt that the government has decided to introduce stringent clauses to the due diligence process on qualified bidders in disinvestment deals of public assets.
First Published: Sep 20,2022 11:08PM
by Ravi Nair with Abir Dasgupta, Paranjoy Guha Thakurta
Pawan Hans
Pawan Hans

Pawan Hans helicopter | Photo courtesy: Pawan hans Helicopters / Jal Hans | Facebook

In a major move, the Ministry of Finance has introduced new guiding principles for the government of India’s disinvestment deals. The Probe has accessed an office memorandum signed by Aseem K Jha, the Under Secretary to the Government of India, which elaborates on the “guiding principles” to be followed during the disinvestment process to bring in the “highest degree of integrity and probity” in the transactions. 

Amongst the other principles, the most significant decision of the government has been to conduct due diligence on bidding entities that are facing pending cases in National Company Law Tribunal (NCLT), National Company Law Appellate Tribunal (NCLAT), Serious Fraud Investigation Office (SFIO) and cases in various courts across the country. In an earlier investigation, The Probe had reported why the bidder in the Pawan Hans disinvestment deal got an adverse order from the National Company Law Tribunal (NCLT), because of which the entire disinvestment proceedings were put into cold storage.

The government’s document on the “guiding principles” states: “Due diligence on qualified bidders including security/political clearance: A security/political clearance of qualified bidders, if necessary from national security angle/FDI Policy angle, may be obtained, based on necessary disclosures from bidders, from the relevant Ministries through the Administrative Ministry. Due diligence on other aspects (status of NCLT/NCLAT/court cases involving such bidders, SFIO concerns etc.) regarding the qualified bidders may also be carried out by the TA/ LA during the process.”

The footnote related to the above paragraph from the government document indicates that the problems faced with the disinvestment of Pawan Hans Limited and CEL forced the government to make these amendments to avoid embarrassment in the future.

The footnote states: “Cases that would cast a doubt on bidder’s ability to close the transaction or manage the Companies when it is disinvested or relating to winding up/insolvency/liquidation proceedings, striking off proceedings under section 248 of the Companies Act, or other proceedings of a similar nature or default, if any committed by a company in the matters of repayment of debentures/deposits under section 71, 73-76 of the Act…” 

The disinvestment of Pawan Hans came under much scrutiny after it was exposed that the government of India did not follow appropriate legal and technical scrutiny of the successful bidder. In the past, another disinvestment deal of the government had come under legal scrutiny after allegations were raised against the reputation of the winning bidder. In January this year, the government pulled the brakes on the privatisation of Central Electronics Limited (CEL) after its employees’ union moved court against the sale of the company to a little-known firm which had alleged links to some members of the ruling party.

In the Pawan Hans case, the NCLT had raised concerns over the financial health of the Cayman Islands-based Almas Global Opportunity Fund (AGOF), a majority stakeholder in Star9 Mobility Private Limited, which had won the bid. The Probe had earlier exposed the company’s links to other entities with questionable backgrounds.

On May 28, The Probe, in an investigative report, revealed details about the link between Almas Global Opportunity Fund and a “notorious”, “Corrupt” Zimbabwean businessman to India’s Pawan Hans disinvestment deal. These reporters exposed the complex web of companies that links the controversial Zimbabwean businessman Kudakwashe Regimond Tagwirei to AGOF, the largest stakeholder in Star9 Mobility consortium, which was declared the winner by the government.

In the article, we delved deeper into the links between AGOF and Tagwirei and described how the firm had allegedly acted as a front for Tagwirei to channel his funds. The report revealed how AGOF had continued to do so after Tagwirei was sanctioned by the governments of the United States of America and the United Kingdom. The Probe further pointed out that two government documents suggested that allowing the sale of Pawan Hans to Star9 Mobility would constitute a violation of government of India rules – due to the adverse order by the Kolkata bench of NCLT against AGOF and due to AGOF appearing to not meet the eligibility criteria to bid for Pawan Hans. AGOF appealed to the National Company Law Appellate Tribunal (NCLAT) against the adverse order. The Probe has learnt that the government is awaiting the decision from NCLAT to take a final call on the Pawan Hans privatisation matter.  

On May 16, these reporters published in The Wire an article investigating the antecedents of a consortium of three companies that came together to set up Star9 Mobility Solutions Private Limited, which was announced as the winner of the auction to acquire Pawan Hans Limited. The article pointed out that little information was available in the public domain about the Cayman Islands registered AGOF.

In a subsequent piece, The Probe published an exclusive interview of the Dubai-based Amardeep Sharma of AGOF with these reporters in which he claimed that he was the company’s ultimate beneficial owner. He also asserted that AGOF had no connection to the controversial Zimbabwean businessman Tagwirei.

AGOF held a majority stake in a company “on behalf of” Tagwirei, according to reports published in the Financial Times, Bloomberg and an American anti-corruption non-profit organisation, The Sentry. In his interview with The Probe, Sharma denied all the claims made by the publications. We examined the related documents and found that Sharma was economical in his disclosures to us. 

In a subsequent story published on The Probe on June 15, we exposed a blow-by-blow account of how various claims made by Sharma to us in the previous interview didn’t add up. For instance, Sharma had denied that Sakunda Holdings Private Limited is Tagwirei’s holding company in Zimbabwe. However, we published an agreement signed in 2013 between Sakunda Holdings and the Singapore-based commodities trading giant Trafigura Private Limited, which distributes fuel in Zimbabwe. Tagwirei had signed the agreement as the company’s director on behalf of Sakunda Holdings.

In the three-part series published in The Probe, we revealed several discrepancies in the bidder selection in the disinvestment deal related to Pawan Hans Limited. The stories raised serious concerns about handing over public assets like the Pawan Hans to private entities with questionable antecedents. 

This month, the union of Central Electronics Limited (CEL) employees said that they would continue their fight against the disinvestment of the public sector enterprise. Several media reports suggested that the government is planning to scrap the sale of CEL to Nandal Finance and Leasing Private Limited as the bidder had failed to reveal its ongoing litigation in the National Company Law Tribunal (NCLT). The Pawan Hans deal, too, has been kept in abeyance, and the government, through its latest order, has decided to start off a clean-up exercise to bring in “integrity and probity” in the disinvestment deals of public assets.

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