Jet Airways crisis: Naresh Goyal, debt-laden airline come under SFIO investigation for fund diversion

In July this year, the government had ordered an investigation into the alleged mismanagement of funds at Jet Airways, which halted operations in April this year after running out of cash.

FP Staff November 11, 2019 16:30:08 IST
Jet Airways crisis: Naresh Goyal, debt-laden airline come under SFIO investigation for fund diversion
  • Goyal's GSA Jet Airways Travels reportedly was a front agency of Jet Airways in several companies

  • The money has been shown as outgoing payments to the sales agents but in many case, it was just a front for the company itself

  • In July this year, the Ministry of Corporate Affairs had ordered SFIO to carry out an investigation into the alleged mismanagement of funds at Jet Airways

Fresh troubles have emerged for debt-laden Jet Airways and its founder Naresh Goyal. The Serious Fraud Investigation Office (SFIO) reportedly initiated an investigation into fund diversion allegedly by Goyal though general sales agents (GSA) model of Jet Airways, said a report in Business Standard.

Goyal's GSA Jet Airways Travels reportedly was a front agency of Jet Airways in several companies and he allegedly used these firms to siphon off funds, the report said quoting investigative agencies.

The money has been shown as outgoing payments to these sales agents but in many case, it was just a front for the company itself. There are many irregularities under investigation," a person in the know of the development was quoted as saying in the report.

Jet Airways crisis Naresh Goyal debtladen airline come under SFIO investigation for fund diversion

Representational image. Reuters.

In July this year, the government had ordered an investigation into the alleged mismanagement of funds at Jet Airways, which halted operations in April this year after running out of cash.

The Ministry of Corporate Affairs (MCA) had ordered SFIO to carry out the investigation, Reuters had reported citing a government order.

The order refers to alleged siphoning off of funds and unspecified financial irregularities at Jet Airways, which was once India’s largest private airline, but did not include details on the allegations or name any individuals.

In September this year, the Enforcement Directorate (ED) had questioned Goyal in a case of an alleged contravention of the foreign exchange law.

This was the first time that the central agency grilled him after it conducted searches against him last year.

Goyal's statement had been recorded under the Foreign Exchange Management Act (FEMA).

It suspected that expenses at these companies were allegedly booked at fake and high costs and as a result, they "projected" huge losses.

A dozen premises, including Goyal's Mumbai residence, his group companies, their directors and offices of Jet Airways, were searched in August.

According to agency sources, the businessman's empire had 19 privately-held companies, five of which were registered abroad.

ED was probing the charges that these firms allegedly carried out "doubtful" transactions under the guise of selling, distribution and operating expenses.

The grounded Jet Airways, which is undergoing insolvency proceedings, had failed to attract any new bidders despite several attempts by a consortium of lenders led by the State Bank of India (SBI).

In August, Russian Fund Treasury RA Partners, Panama-based investment firm Avantulo Group and South American conglomerate Synergy Group Corp had submitted EoIs. But, nobody had turned to take over Jet Airways.

In August this year, billionaire businessman Anil Agarwal said he was not interested in the crisis-hit airline stake a day after announcing interest in the airline.

Gulf carrier Etihad, which holds 24 percent stake in Jet Airways, had also decided not to reinvest in the airline due to unresolved issues concerning liabilities.

With inputs from agencies

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