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Hindujas hope to stay in Air India race

The billionaire Hinduja brothers, three of whom are facing trial on allegations of receiving illegal payments for government arms sales, on Wednesday tried to stay in the bidding for India's state-run airlines, rejecting all such charges made against them.

"We have sent our reply to the government. We have rebutted all the allegations focused on the Hindujas' involvement in the Bofors case," R J Shahaney, chairman of Madras-based bus and truck maker Ashok Leyland which is collaborating with the Hindujas on the bid, told Reuters.

"It is the Hinduja brothers who face charges in the Bofors trial, not the entire Hinduja group," Shahaney said.

The Hinduja brothers, whose interests span media, banking and oil, have been accused of receiving illegal payments from Sweden's Bofors in a $1.2-billion arms sale to the Indian army in 1986.

The brothers, two of whom are British and a third is a Swiss national, deny any wrongdoing.

Last month, a cabinet panel disqualified the tycoons from bidding for Air India and Indian Airlines, but gave them a last hearing through a "show-cause" notice.

The government has now to decide whether to accept the Hindujas reply.

A consortium led by Ashok Leyland, the Hindujas' flagship company in India, has put in bids for the two airlines on the block. The consortium comprises Ashok Leyland, Hinduja Finance Corporation and an overseas corporate entity, Machen Development Corporation.

New Delhi is selling a 40 per cent stake in long-haul airline Air India and a 26 per cent stake in Indian Airlines, which flies mostly domestic routes.

Singapore Airlines, bidding in tandem with the Tata group, has submitted the only other bid for Air India.

The government has yet to call for final bids for Air India and Indian Airlines. The high-profile sales, seen as a litmus test of the government's commitment to privatisation under its economic liberalisation drive, were slated to be completed by year-end.

For the 26 per cent stake offered for Indian Airlines, the government received bids from Videocon International, a domestic home electronics company, and the Hindujas.

Videocon withdrew from the Indian Airlines race after the Securities and Exchange Board of India barred it from raising capital for three years following a probe into alleged manipulation of its shares. This left only the Hindujas in the fray for the airline.

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