Controversy dogs the NDA government's effort to settle into disinvestment overdrive. With the strategic sale of public sector giants like VSNL, Air India and Indian Airlines imminent, the Congress, led by former Finance Minister Manmohan Singh, has decided to join the opposition. Mr. Singh reportedly told the press at Bangalore that "The BJP is trying to sell Air India for a song". There were two grounds that he provided in defence of that judgement. First, the government's decision to suspend the managing director of the airline, Michael Mascarenhas, at this crucial juncture, based on charges of providing its general sales agent in London unusually lucrative terms. Second, the fact that in the run up to disinvestment, the government had chosen to "hawk" bilateral landing rights to other foreign airlines which, while improving the airlines' bottom line temporarily, undermines the value of its stock.
 
The first of these arguments is of more substance than appears true at first sight, since Air India is not the only instance where the government has forced a change of guard on the eve of disinvestment. Recently, Amitabh Kumar, who headed VSNL has also been shown the door on charges of corruption on the eve of privatisation. To make the charge is not to dismiss the allegations of irregularities against these two high-profile, senior executives, but to question the timing of the decision to press charges and force their exit.
 
Consider the charges against Mascarenhas. Two of them have been highlighted. The first that during his tenure Welcome Travels, the airline's general sales agent in the UK, was shown undue favour and provided with irregular performance-linked incentives (PLIs) that cost Air India a substantial sum. A recent report by the Comptroller and Auditor General, analyzing such incentive payments during 1987-2000 has held them to be irregular and noted that while a commercial organisation may adopt dynamic and flexible modules of decision-making in order to further its commercial interests, the organisation ends up a loser if these modules are adopted for showering "selective favours" on a particular party. A subsequent investigation by the Chief Vigilance Officer of the airline had corroborated the findings and ostensible pinpointed responsibilities. These findings have provided the basis for the suspension of Mascarenhas and another senior executive of Air India.
 
However, the fact of the matter is that these ‘irregular' PLIs have allegedly been made over an extended period, starting 1992-93. Can Mascarenhas, who has been the Chief Executive of the airline for a small part of this period, be held responsible for all of these irregularities or was he carrying forward a practice that had been established earlier? The argument being used by the Ministry is that several officers, including Mr Mascarenhas and Mr P.K. Sinha, were at crucial posts both in 1992-93 and 1997-98 when changes in the PLI for the London GSA were decided upon.
 
This, however, leaves unanswered the question as to why such charges were not investigated earlier. More crucially, the suspension orders were served on Mascarenhas only on May 23 this year, even though the report of the CVO had been received in October 2000. Reportedly, the ministry formally wrote to the CBI to launch a probe into the alleged irregularities only on May 22. What is more, precisely at the time when action was possibly being contemplated, another case of irregularity against Mascarenhas had been raked up. This relates to a decision to wet lease aircraft, or contract to lease on terms which involved use of and payment to crew too, from Caribjet. Ostensibly such an arrangement is far less commercially acceptable than a dry lease. Initially, Air-India had taken two Airbus A310 aircraft on wetlease from Caribjet for a year in 1994. Subsequently, Air-India also wet-leased two L1011 aircraft and a A310 for a period of two years. The agreement, however, had to be terminated since it was found to be commercially unviable. However, since there was no exit clause in the agreement, Air-India had to pay compensation to Caribjet to the extent of Rs 107.52 crore.
 
The Caribjet case was first referred to the CBI on February 11 last year, and is currently under investigation, but the CBI has not reported its findings to the ministry yet. But the fact that it has been the focus of media attention at this juncture fuels suspicion that Mascarenhas is being specially targeted now. Overall, given this history, it is not out of place for Dr. Manmohan Singh to make an issue of the sudden decision to nail Mascarenhas at this crucial juncture. If he had not been proceeded against earlier, holding out till the disinvestment process had been completed would have helped the government avoid the allegation that it is sullying the corporation's image on the eve of disinvestment.
 
A similar allegation can be made in the case of VSNL where its high-profile, Director (Operations), Amitabh Kumar, who also acted as Managing Director during a crucial phase of VSNL's history has been forced to put in his papers. Kumar was served a chargesheet at the end of May, on the basis of recommendations from the Central Vigilance Commissioner. Kumar was quick to respond with a statement that: "The allegations are baseless and appear to have been motivated''. He said they were on account of ``internal rivalry within VSNL as well as external pressure from vested interests who want to bring down the value of the company during the critical period in the run up to the company's disinvestment.''