MCA probes Jet Airways on suspicion of siphoning funds: Sources

The Ministry of Corporate Affairs is probing allegations of fund siphoning at Jet Airways, the country’s second largest domestic airline by market share. “The probe is at a very crucial stage. The inquiry is being carried out by the western division based in Mumbai,” a senior government official said. 

The inquiry comes in the backdrop of Jet Airways deferring its first quarter results. While sources attributed the delay in announcing its result to differences with auditors, the airline denied any clash between the two. Subsequently, the company said it would declare the first quarter result on August 27.

“The deferment of quarterly results of Jet Airways has been alarming and without any convincing reason,’’ Arvind Gupta, trustee of Indian Investors' Protection Council and whistleblower in the ICICI Bank case, said in his letter to the Prime Minister’s Office (PMO)  last week. The valuation of Jet Airways has tanked to historic lows eroding shareholders' money, Gupta added.

In fact, Gupta had complained to government authorities in 2016, alleging  that more than Rs 50 billion was siphoned out of the airline by its promoter Naresh Goyal through several questionable transactions. According to Gupta, no action was taken on his complaints and therefore he wrote a fresh letter to the PMO last week. 

Jet Airways did not immediately respond to an email query from Business Standard on the subject.

However, Jet Airways informed stock exchanges it has not received any communication from the ministry of corporate affairs in this regard.

In May, Jet had informed the stock exchange that Securities and Exchange Board of India (Sebi) had sought details from the airline upon receiving similar kind of complaints end of April. Jet's notification at that point was in response to a news report which accused Goyal of fraudulent practices. The airline said those were unsubstantiated allegations. 

“The company had forwarded its response to Sebi in July 2016. No further communication was then received from Sebi,” it said in a stock exchange notification. The issue resurfaced at Sebi in April, before it reached the Ministry of Corporate Affairs recently.     

TROUBLE IN THE AIR

 

  • Jet Airways defers its results after auditors refuse to sign it
  • Sebi has initiated a probe against the company
  • There are allegations of siphoning of funds by the company
  • Jet Airways has sought Rs 50 billion loan to pay overseas debt
  • Jet Airways is also planning to lease aircraft to other airlines in an attempt to use its resources optimally