The Ministry of Corporate Affairs (MCA) has asked Serious Fraud Investigation Office (SFIO) to initiate a probe into Jet Airways and its subsidiaries over suspicions that the promoters of the company siphoned off funds, reports said. Weighed down by a debt burden of Rs 8,400 crore, the airline had to suspend operations in mid-April after it ran out of funds to stay afloat.
The government has discovered enough evidence of money siphoning, and it warrants SFIO probe, CNBC-TV18 reported while quoting an anonymous source. The report of Western Regional Director was submitted earlier this week, which was examined in detail by the ministry before the probe was ordered, the report further said.
The Mumbai-based Western Regional Director was looking into the book of accounts of Jet Airways and its subsidiaries since last year. The inspection of Jet Airways' accounts was started eight months after ministry directions to ascertain if there was any diversion of funds. The Registrar of Companies (RoC) had also been included in the inspection after the airline did not present its financial results for the first quarter of FY19.
The SFIO probe against Jet Airways has been initiated a day after the Enforcement Directorate (ED) begun an initial probe into Etihad Airways PJSC's (Public Joint Stock Company) investment in the airline's frequent flyer programme, Jet Privilege. The ED is probing to ascertain whether foreign direct investment (FDI) norms were violated by Etihad that took a stake in JPPL in 2014.
The ED had called certain Jet Airways officials for questioning to get an idea about the structure of the deal between Etihad and JPPL. The official said that previous queries raised by FIPB to both the airlines had gone unanswered.
Jet Airways had temporarily suspended operations on April 17 after failing to convince its lenders to infuse funds required to pay vendors and services providers. The airline is presently under the command of a SBI-led consortium of banks which had extended loans to the airline.
The consortium of lenders is planning to hold a bidding process for selling stake in Jet Airways. The proceeds of the stake sale will go towards realising the airline's debt. Four entities - Etihad Airways, TPG Capital, Indigo Partners and National Investment and Infrastructure Fund (NIIF) - have been shortlisted for the bidding process, which will be completed on May 10.