Enforcement Directorate slaps forex violation case on AirAsia

MUMBAI:The Enforcement Directorate (ED) has registered a case of foreign exchange violation against AirAsia India and has summoned the airline’s chief financial officer (CFO).
Malaysian low-fare carrier AirAsia Berhad and Tata Sons each own 49% in the airline while the remaining 2% is owned by chairman S Ramadorai and director R Venkataramanan.
An AirAsia spokesperson said, “We have not received any official communication yet; if and when we do, the company will take appropriate steps.”
ED probing if consultant fee was bribe or terror fund
The ED has asked the CFO to submit some documents related to financial transactions.After the fallout between Ratan Tata and Cyrus Mistry, “unknown sources’’ provided the directorate with information on AirAsia, including its audit report conducted by Deloitte.Officials stated that they had examined the audit report and found it genuine.
Sources said that Mistry’s allegation of fraudulent payment to a private consultant company prima facie suggests FEMA violations. The enforcement agency is mainly focusing on three aspects of the case— whether the payment made to the consultant was for his services or if it was a bribe to government officials for favours.
It is also probing whether there is any substance in the allegations that money paid to the consultant was channelled to terrorists as one of his partner in another company was declared a terrorist by the US, and that there were violations of foreign direct investment (FDI) norms.
Mistry, soon after he was replaced as chairman of Tata Sons on October 24, in a letter to Tata Sons board and trustees of Tata Trusts, had said, “Board members and trustees are also aware that in the case of AirAsia, ethical concerns have been raised with respect to certain transactions as well as the overall prevailing culture in the organization. A recent forensics investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore.”
The audit report stated that one Rajendra Dubey was the liaison who would set up meetings of AirAsia India’s management with chief ministers and political leaders across the country. But, there was no contract between AirAsia and Dubey for these services.
AirAsia India made a payment of Rs 12.28 crore against invoices of a Singapore-based entity in which Dubey was a director. There was no evidence about the actual services the Singapore company had provided.
The report also stated that Dubey was a director in one more company along with a Dubai-based resident who had been declared a specially designated global terrorist by the US Department of Treasury.
Senior BJP leader Subramanian Swamy had earlier alleged that money had flown to a terrorist (in the company where Dubey and the Dubai resident are partners) from the Tata-AirAsia deal.
Apart from these details, the ED also come across FDI violations. Then the government liberalised foreign investment rules and AirAsia Bhd augmented its stake in AirAsia India to 49%. ED sources said despite having 49% in the company, AirAsia Bhd was managing all its affairs, which was violation of FDI rules.