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Wednesday, Nov 26, 2003

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Govt rejects Eurobank's plan to set up academic institutes

Ambarish Mukherjee

New Delhi , Nov. 25

THE Government has turned down a $170-million (approximately Rs 765 crore) proposal from Latvia-based Eurobank International Trust (EIT) to set up five academic institutions in India in collaboration with Gauri Baidyanath Trust.

EIT and Gauri Baidyanath Trust had approached the Foreign Investment Promotion Board (FIPB) seeking permission to form a joint venture company with 50 per cent foreign equity participation by the Latvia-based company amounting to $170 million in the company's paid-up capital.

According to the proposal submitted to FIPB, the joint venture company was envisaged to set up a medical college and hospital, one dental college and hospital, one paramedical college, one nurses' training school and one management institution.

The FIPB, however, rejected the proposal, raising doubts over the credentials of the foreign partner. The board also decided to act on its own and did not forward the proposal to the Cabinet Committee on Economic Affairs (CCEA), which is the final authority to decide the fate of all investment proposals worth Rs 600 crore.

According to official sources, while the investment was proposed to come in through EIT, the foreign collaborator is Eurobank Trust British Isles (ETBI), which is incorporated in the Isle of Man owing to favourable tax laws there. This trust has a number of other trusts and companies under its fold and is made up of high networth individuals who wish to remain anonymous because of tax considerations and this leads to many questions, the sources said.

They further pointed out that the background and experience of the foreign collaborators had also not been furnished properly and the entire transaction appears to be a disguised way of funding through external commercial borrowings (ECBs) and hence, rejected.

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