ED summons AirAsia India over alleged FEMA violation
Amidst the boardroom battle between the Tata Sons and its ousted chairman Cyrus Mistry, the Enforcement Directorate (ED) has issued summons to AirAsia in connection with the alleged fraud of Rs 22 crore made by Mistry in its five-page long letter sent to the company board members and Tata Trust trustees.
Confirming the development, a top ED official told Business Standard that the representative of AirAsia has been asked to present before it next week in Mumbai.
“We have initiated the probe in the matter under Section 3 of the Foreign Exchange Management Act (FEMA), 1999. Primarily the focus is to see the irregularities in the said transaction involving non-existent parties in India and Singapore,” said official cited above.
In an e-mail response, AirAsia spokesperson said: “We have not received any official communication yet. If and when we do, the company will take appropriate steps,”.
The move comes in the wake of Mistry’s revelation of Rs 22-crore ‘fraud’ in AirAsia India and subsequent complaint made by BJP MP Subramanian Swamy seeking an investigation.
Mistry in his first letter had claimed that despite forensic investigation revelations, executive trustee Venkatraman who is on the board of AirAsia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study. “It was only at the insistence of independent directors, one of whom immediately submitted his resignation, that the board decided belatedly to file a first information report (FIR)”, he had said in the letter.
Post Mistry allegations, the forensic audit carried out by Deloitte revealed amongst other things questionable payments of Rs 12.28 crore by the airline to HNR Trading, a Singapore-based entity for liaisoning with government. The audit revealed there was no contract between the airline and HNR Trading’s director Rajendra Dubey and no evidence of actual services was found. However, Dubey has denied reports of being a lobbyist for AirAsia India or of having assisted former CEO Mittu Chandilya.
Additionally, about Rs 10-crore payment was made to an entity called Link Media Immigration Services Private Limited for media services. But the audit found no such company registered with corporate affairs ministry and site visits to listed addresses revealed no such business establishment.
The forensic audit was ordered following complaints misappropriation of funds by former executives of the airline and an internal audit. The complaints pertained to reimbursement of expenses incurred by officials and their families. Following the complaints, an internal audit was ordered by the airline’s management.
In October-end, AirAsia India issued a statement saying that investigation is underway against certain former officials of the airline for irregular personal expense claims and other company charges. Meanwhile, the airline also filed a complaint with Bengaluru police against unknown persons in the matter.
