We have launched our mobile app, get it now. Call : 9354229384, 9354252518, 9999830584.  

Current Affairs

CBI probe into Hindustan Zinc disinvestment

Date: 23 November 2021 Tags: Bills & Laws

Issue

The Supreme Court has asked centre to conduct CBI investigation into the alleged irregularities in the process of disinvestment of Hindustan Zinc Ltd (HZL).

 

Background

The alleged irregularities took place in 2002 during the process of disinvesting 26 per cent of government shares in the company.

 

Details

  • The court also gave the green signal for the centre to disinvest its 29.54 per cent residual shares in Hindustan Zinc Ltd (HZL).

  • The petition was filed by National Confederation of Officers Association of Central Public Sector Enterprises and some others.

  • The value of government stake in open market is worth Rs 40,000 crore. It will help government raise revenue for other public purposes.

 

The HZL

  • Under the Companies Act 1913, the Metal Corporation of India Limited in 1944 became a public limited company.

  • The Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976 made the company a public enterprise.

 

The disinvestment process

  • The plan of disinvestment started in 1991-92, when government disinvested 24.08 per cent of its shareholding in the domestic market. 

  • Of the disinvested shares, 12.54 per cent was acquired by financial institutions, 7.58 per cent by corporate bodies and non-resident Indians and 3.96 per cent by Indian nationals.

  • The government decided for strategic disinvestment by offloading 26 percent of its share to a strategic partner.

  • Sterlite Opportunities & Ventures Ltd. was selected as a strategic partner. The government was left with only 49.92 per cent stake.

  • The Sterlite Opportunities &Ventures Ltd became the majority stakeholder with 64.92 per cent equity stake after it purchased share from open market and exercised its call option.

 

The cases against the process

  • The petition was filed to prevent Government and the Department of Disinvestment from disinvesting the shareholding of 29.54 per cent in HZL.

  • The CBI had already conducted enquiry in the second tranche disinvestment process in which 26 per cent of equity holding of the Union Government was sold.

  • The court says that there were some differences of opinion regarding closure report filing. The court has asked for registering a regular case and performing investigation into allegations.