EAS Sarma alleges DIPAM failed in due diligence for IDBI sale
The former government secretary has called for an independent enquiry into the propriety of the IDBI Bank disinvestment process.
Former government secretary EAS Sarma has alleged that the Department of Investment and Public Asset Management (DIPAM) failed to exercise due diligence to ensure the IDBI Bank disinvestment process is free from conflicts of interest, according to BusinessLine.
Sarma, who has written a series of letters to the Union Finance Minister, questioned whether the proposed buyer, Canada-based Fairfax, is using foreign direct investment to purchase IDBI equity.
He noted that KPMG, the transaction adviser to DIPAM, has provided non-audit services to IIFL Capital for the last three years. Sarma pointed out that Fairfax holds a substantial equity share in IIFL Capital and has reportedly indicated intentions to increase its stake in the firm to 51 per cent.
Sarma claimed the government is selling its 30.48 per cent stake and LIC's 30.24 per cent stake at a price significantly lower than the intrinsic value of the assets.
The former secretary argued that the government's claim that the sale will provide additional fiscal resources is flawed. He stated that if Fairfax's claims regarding the use of excess capital are accepted, the government is essentially handing a public asset to a foreign firm for nothing.
Sarma has demanded that the government stop the sale and institute an independent enquiry into the prudence of the deal, with findings presented to Parliament.