Nod for official audit of Shimla’s prized Wildflower Hall

July 15th, 2011 - 3:35 pm ICT by IANS  

Shimla, July 15 (IANS) The Comptroller and Auditor General (CAG) of India has given the nod for a special audit of the Oberoi Group’s Wildflower Hall, a landmark luxury hotel on the outskirts of this city, say officials.

“We have got the green signal to proceed further with the audit of Wildflower Hall,” Rita Mitra, principal accountant general, Himachal Pradesh, told IANS.

The CAG’s decision came on the request of the state government, which suspects some financial fiddles in the heritage hotel that has been running into losses. The government is a stakeholder in the hotel.

“The state government had sent a formal request to us for a special audit of the company that operates the hotel,” Mitra said.

An official in the accountant general’s office, requesting anonymity, said some details have been sought from the government regarding the pact signed with Mashobra Resorts, the Oberoi group company that runs the hotel, and all proceedings of the meetings of the hotel board of directors.

The hotel was handed over to the Oberoi Group under a joint venture in 1995 by the then Congress government.

Chief Minister Prem Kumar Dhumal last month said the government has asked the audit agency to conduct a special audit of Mashobra Resorts Ltd as it has been incurring huge losses since its inception in March 2001.

“How is a world-class hotel that’s attracting guests from across the globe running into losses? This is something unusual, unbelievable. The company that is quite professional is hiding facts,” Dhumal told IANS.

“It’s strange that the Oberoi’s other two ventures in Shimla - Clarke’s and Cecil - are making profit. Only Wildflower Hall is running into losses, that too for years together.”

British-era Wildflower Hall was once the residence of Lord Kitchener, the commander-in-chief of the British.

After India’s independence, the building was handed over to the Himachal Pradesh Tourism Development Corp for running a hotel. It was gutted in a fire in 1990.

The government then approached prominent hoteliers and finally shortlisted the Oberois.

It was handed over to the hospitality group to set up a five-star hotel. At that time, the cost of constructing the 85-room hotel was pegged at Rs.40 crore (Rs.400 million) and the state government’s share was fixed at 35 percent.

Subsequently, the Oberois raised the cost of the project to over Rs.990 million, which reduced the government’s equity, government officials said.

The government scrapped the joint venture agreement with the Oberois in 2002, pointing out serious irregularities in the construction cost. The Oberois challenged the decision of the government in the Himachal Pradesh High Court, which appointed an arbitrator.

The arbitrator in his decision in 2005 said the partnership was irreconcilable and asked for converting the agreement into a leasehold property.

The Oberois, who were told to pay Rs.940 million to the government as rent for a period of 40 years from 1995, again moved the high court against the decree. The case is now pending in the court.

Wildflower Hall, because of the breathtaking view it accords, is sought after by high-value tourists, celebrities and politicians.

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