Jet faces MCA probe on siphoning of funds

The corporate affairs ministry is probing allegations of fund siphoning at Jet Airways, the country’s second-largest domestic airline by market share. “The probe is at a 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 deferring its first quarter results announcement.

While sources attributed the delay to differences with auditors, the airline denied any clash between the two. Subsequently, the carrier said it would declare Q1 result on August 27.

“The deferment of quarterly results of Jet 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 a letter to the Prime Minister’s Office (PMO) last week. The valuation of Jet has tanked to historic

lows, eroding shareholders' money, Gupta said. He had complained to government authorities in 2016, alleging over ~50 billion was siphoned out by its promoter Naresh Goyal through questionable transactions.

According to Gupta, no action was taken on his complaints and, therefore, he wrote a fresh letter to the PMO.

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

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 report that accused Goyal of fraudulent practices. The airline said those were unsubstantiated allegations.

Sebi inquired about fund siphoning first in 2016.

“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.