Jet-Eti­had deal gets FIPB nod

Rid­ers at­tached to main­tain ef­fec­tive In­dian con­trol over air­line

The Political and Business Daily - - FRONT PAGE -

THE con­tro­ver­sial Rs.2058 crore deal un­der which Abu Dhabi based Eti­had will hold 24 per cent stake in Jet Air­ways to­day got the ap­proval of the For­eign In­vest­ment Pro­mo­tion Board (FIPB) with ma­jor rid­ers to main­tain ef­fec­tive In­dian con­trol over the air­line.

"Jet man­age­ment has to work as per the In­dian law. They would have their head­quar­ters in Mum­bai. They would be gov­erned by the In­dian Air­craft Rules," Civil Avi­a­tion Min­is­ter Ajit Singh told re­porters here.

Se­ri­ous con­cerns had been raised re­gard­ing the ef­fec­tive con­trol and own­er­ship of Jet Air­ways af­ter Eti­had picks up stake in the In­dian air­line. Some MPs had also raised ques­tions whether the op­er­a­tional base of Jet would shift to UAE af­ter the deal.

Un­der the con­di­tions set by FIPB, Jet will have to seek prior Govern­ment ap­proval to make any changes in the Share Hold­ers Agree­ment (SHA) with Eti­had or any change in share-hold­ing of the com­pany.

"We have ap­proved (the JetEti­had deal) with some condi- tions," Eco­nomic Af­fairs Sec­re­tary Arvind Ma­yaram said.

The con­di­tions also in­clude that all share­holder dis­putes and dis­putes un­der SHA would have to be ad­ju­di­cated un­der In­dian law as op­posed to English law as was pro­posed in the re­vised SHA sub­mit­ted just be­fore the FIPB meet­ing. Any other ar­bi­tra­tion can hap­pen un­der English law.

Be­sides agree­ing to th­ese changes, Jet and Eti­had would have to sub­mit new Ar­ti­cles of As­so­ci­a­tion be­fore the deal is put be­fore Fi­nance Min­is­ter P Chi­dambaram for ap­proval and then to the Cabi­net Com­mit­tee on Eco­nomic Af­fairs. Main­tain­ing that the FIPB clear­ance would restore con­fi­dence of in­vestors on In­dia,

the Civil Avi­a­tion Min­is­ter said the is­sues raised by some MPs and oth­ers were "po­lit­i­cally mo­ti­vated" and all their con­cerns have been re­solved.

Eti­had would now have two seats on the 12-mem­ber Jet Board in­stead of three pre­vi­ously pro­posed. The In­dian part­ner, Naresh Goyal, be­sides ap­point­ing four board mem­bers, would have the right to nom­i­nate the Chair­man, whereas Eti­had would ap­point a vice chair­man.

The 12-mem­ber Board would have four Di­rec­tors from Jet, two from Eti­had and six in­de­pen­dent di­rec­tors.

BJP MP Nishikant Dubey said he would raise the is­sue in Par­lia­ment and Janata Party chief Subramanian Swamy threat­ened to move court if the Jet deal was not put on hold on grounds of national se­cu­rity.

"The deal ap­proved by the FIPB with rid­ers is more alarm­ing. Though it is yet to be cleared by the Cabi­net, I will raise the is­sue in the forth­com­ing mon­soon ses­sion of the Par­lia­ment," Dubey said.

Dubey, who has writ­ten sev­eral let­ters to the Prime Min­is­ter as well as the Chief Vig­i­lance Com­mis­sioner on the is­sue, said the pro­posed deal was "against national in­ter­est". Swamy too re­it­er­ated his threat of mov­ing court if the deal was cleared by the Cabi­net Com­mit­tee on Eco­nomic Af­fairs.

"We knew it (FIPB ap­proval). But Sebi, CCI and Cabi­net has yet to clear it. De­spite all the cut and paste job (tweak­ing of the share­hold­ers agree­ment), the il­le­gal­i­ties con­tinue and its fun­da­men­tals re­main un­changed," he said.

The Janata Party chief, who shot off an­other let­ter to the Prime Min­is­ter to­day, claimed that the deal had "se­ri­ous national se­cu­rity" im­pli­ca­tions.

"I ex­pect that you would put a hold on both the In­dia-UAE bi­lat­eral and the Jet-Eti­had pro­posed deal un­til a thor­ough in­de­pen­dent in­ves­ti­ga­tion is made. But I find in­stead enor­mous and un­be­com­ing haste in the man­ner in which the en­tire trans­ac­tion has been sought to be rail­roaded."

How­ever, ma­jor con­sul­tancy firm KPMG ex­pressed the hope that govern­ment clear­ance to the deal would lead to more such deals in the com­ing months.

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