Why vic­timise de­fence only?

The foren­sic au­dit re­port by Deloitte on AirAsia In­dia has re­vealed fraud­u­lent trans­ac­tions of R22 crore to par­ties in In­dia and Sin­ga­pore that do not ex­ist

SP's MAI - - MILITARY VIEWPOINT - The views ex­pressed herein are the per­sonal views of the au­thor.

The murky con­tro­versy that has been rag­ing in the Tata busi­ness em­pire in the wake of the un­cer­e­mo­ni­ous ouster of its Chair­man Cyrus Mistry in the past few weeks has sud­denly taken a turn for the worse on ac­count of the dam­ag­ing con­cerns raised by the out­go­ing Chair­man per­tain­ing to busi­ness ethics and cul­ture of the newly es­tab­lished low-cost car­rier AirAsia In­dia, a ven­ture by the Malaysia-based AirAsia Ber­had, in which Tata Sons hold a 49 per cent stake. The oth­er­wise im­mac­u­late rep­u­ta­tion of the Tata Group has been un­der­mined and badly tar­nished by the ques­tion­able and shady fi­nan­cial trans­ac­tions by the own­ers of AirAsia Ber­had while es­tab­lish­ing its joint ven­ture air­line in In­dia. The du­bi­ous fi­nan­cial trans­ac­tions in ques­tion are not in con­form­ity with the cul­ture of the House of Tatas and are not in tune with the rep­u­ta­tion of this global busi­ness con­glom­er­ate.

It was in early 2013 that Tony Fernandes, the Chief Ex­ec­u­tive of Malaysia-based lead­ing low-cost car­rier AirAsia Ber­had, made pub­lic its plans to join hands with the In­dian con­glom­er­ate Tata Group along with a third in­vestor, Arun Bha­tia of Te­lestra Trade­place to launch its sub­sidiary air­line in In­dia. Tony Fernandes re­vealed that his air­line had ap­plied for sanc­tion by the In­dian For­eign In­vest­ment Pro­mo­tion Board for 49 per cent stake in the joint ven­ture. Since its in­cep­tion, the In­dian air­line in­dus­try had not been open to for­eign car­ri­ers for in­vest­ment. How­ever, it was the Man­mo­han Singh-led gov­ern­ment un­der UPA II that made the nec­es­sary changes in the ex­ist­ing reg­u­la­tions paving the way for for­eign air­lines to join hands with In­dian car­ri­ers or with en­trepreneurs to set up air­lines in In­dia in the pri­vate sec­tor. How­ever, in­vest­ment by for­eign car­ri­ers was lim­ited to 49 per cent. The lead­ing pri­vate car­rier in In­dia Jet Air­ways was the first in the race, hav­ing es­tab­lished a suc­cess­ful part­ner­ship with the Abu Dhabi-based Eti­had Air­ways. This was fol­lowed by AirAsia Ber­had and Sin­ga­pore Air­lines that set up Vis­tara once again in part­ner­ship with Tata Sons.

As per a foren­sic au­dit re­port by Deloitte In­dia, the eth­i­cal con­cerns raised by Cyrus Mistry per­tain to pay­ments al­leged to have been made to Ra­jen­dra Dubey, an aide of Mittu Chandilya, the erst­while Chief Ex­ec­u­tive of AirAsia In­dia, for ar­rang­ing ac­cess since Au­gust 2013 to the po­lit­i­cal lead­er­ship of the coun­try as also of the var­i­ous states in­volved, in the process of set­ting up of the joint ven­ture air­line. The au­dit re­port has re­vealed fraud­u­lent trans­ac­tions to the tune of ` 22 crore to par­ties in In­dia and Sin­ga­pore that in fact do not ex­ist. The re­port states that “Ra­jen­dra Dubey, Di­rec­tor in a Sin­ga­pore-based firm HNR Trad­ing, re­ceived ` 12.28 crore for gov­ern­ment/reg­u­la­tory frame­work, though there is no ev­i­dence of ac­tual ser­vice pro­vided”. The Deloitte au­dit re­port main­tains that se­nior ex­ec­u­tives of the Tata Group were aware of the ir­reg­u­lar pay­ment to Dubey through HNR Trad­ing. Deloitte stum­bled upon another trans­ac­tion in which ` 10.05 crore was trans­ferred to a shell com­pany called Link Me­dia Im­mi­gra­tion Ser­vices. The au­dit re­port in­di­cated that the pay­ment was made on Chandilya’s di­rec­tion and that site vis­its re­vealed the ad­dresses were not gen­uine.

Apart from the pay­ments that did not ap­pear to be above board, AirAsia In­dia has been mired in other con­tro­ver­sies. An avi­a­tion an­a­lyst, who headed op­er­a­tions at In­diGo and Air In­dia, had ob­served that con­trary to In­dian for­eign di­rect in­vest­ment and avi­a­tion poli­cies that re­quire the con­trol of a for­eign sub­sidiary to be vested in an In­dian en­tity, AirAsia Ber­had con­tin­ued to ex­er­cise strate­gic con­trol over the op­er­a­tions of AirAsia In­dia. In 2014, Subramanian Swamy, Mem­ber of the Ra­jya Sabha from BJP, had chal­lenged the clear­ance granted to the air­line AirAsia In­dia, charg­ing that “ei­ther the re­sponses filed by the au­thor­i­ties be­fore the court were false and mis­lead­ing or the Di­rec­tor Gen­eral of Civil Avi­a­tion had acted il­le­gally and in ut­ter dis­re­gard of the law”. Swamy had ar­gued that AirAsia In­dia’s li­cence be re­voked since the new ven­ture had re­ceived for­eign in­vest­ment ap­proval with­out hav­ing es­tab­lished op­er­a­tions in the coun­try. In its re­sponse to the al­le­ga­tions of fi­nan­cial im­pro­pri­ety by the man­age­ment and the pro­mot­ers of AirAsia In­dia, the Min­istry of Civil Avi­a­tion (MoCA) has been some­what sub­dued. A state­ment from the MoCA said, “We are wait­ing for any in­put from any quar­ter. We have not re­ceived any­thing so far”. If the gov­ern­ment can be overtly proac­tive in deal­ing with a heavy hand with al­le­ga­tions of the small­est cases of cor­rup­tion in the pro­cure­ment of mil­i­tary hard­ware which is sub­ject to an ex­tremely strin­gent se­lec­tion process, it is some­what in­con­gru­ous that the re­sponse by MoCA to al­le­ga­tions of fi­nan­cial im­pro­pri­ety by for­eign air­lines to at­tain their busi­ness goals in In­dia, should be so pas­sive and meek.

While the gov­ern­ment is ruth­less in deal­ing with even mi­nor cases of al­le­ga­tions of cor­rup­tion in de­fence pro­cure­ment, sur­pris­ingly, it re­mains un­re­spon­sive to al­le­ga­tions of se­ri­ous fi­nan­cial im­pro­pri­ety by AirAsia In­dia

AIR MAR­SHAL B.K. PANDEY (RETD)

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