Cockar report: Grand Regency transaction was not transparent

(a) Sale by public auction: This the Governor feared would have entailed the services of an auctioneer who would also have been entitled to his commission based on the sale price. Further in public interest auction without any prior negotiations between the parties it would not have been possible to sell the hotel as a going concern.

(b) Sale by Private Treaty by CBK as the Chargee: CBK as the chargee found this the more advantageous option of the two for reasons which the Governor gave as follows:

(i) On the basis of the valuation report of the three valuers CBK was in a position to negotiate a sale price, which was considerably higher than the current open market value of the Hotel.

ii) The Hotel was to be sold as a going concern and hence the security of the jobs of its 400 employees would have been ensured.

iii) CBK would not be obligated to make any warranties to the purchasers in respect of the condition or suitability of the property for any purposes whatsoever.

iv) There was agreement on the terms and conditions of the sale and therefore the transaction would be carried out in a very amicable and expeditious manner.

For the above reasons, the Governor said that CBK had opted to sell the Hotel by private treaty.

We have carefully considered the method adopted by CBK to dispose of the Hotel and the reasons given by the Governor for the adoption of “Sale by Private Treaty” option.

We are unable to subscribe to the Governor’s views on the options available to the CBK.

On the basis of the evidence before the commission, we do not also accept that there were any credible threats to the sale of the Hotel by CBK to warrant proceeding with reckless speed and secrecy in the transaction. As already stated, the major threat had been removed through the Settlement with UHDL and Mr Pattni.

Common knowledge

It is common knowledge that the best price is obtained through offering the subject property to the highest bidder after an open and public invitation to all those interested.

Mr Kittony’s evidence demonstrated that this had been done in past attempts to sell the Hotel. All that Laico would have needed to do to acquire the Hotel was to top the highest bid. The invitation of public bids also obviates the need for auctioneers, and the payment of their commissions would therefore not arise.

As regards the need to preserve the jobs of over 400 employees of the Hotel or freedom from any obligations or warranties towards the serviceability or suitability for the purposes of the business being carried on, we make the following observations:

1) The jobs of the existing work force could have been ensured by advertising the sale subject to preservation of the jobs.