Less than 10 days after IndiGo promoter Rakesh Gangwal alleged "corporate governance lapses" and "related party transactions" in India's largest airline company InterGlobe Aviation, it has been revealed the independent forensic review conducted by Ernst & Young had found no such "procedural lapses" and, in fact, all transactions were done at "arm's length", a Business Standard report claimed. Though most of these transactions were approved by the company's audit committee, in some cases, their approval was sought after carrying out transactions, stated the report. Apart from "minor irregularities", the EY report did not find any transgression.
"All transactions enterred into with related parties as defined under the Act and the Listing Regulations during the last five financial years were on an arm's length basis...none of the transactions with any of the related parties was in conflict with the interest of the company," the EY report stated, claimed the daily.
The EY review was conducted after Gangwal alleged serious corporate governance lapses in the company's board meetings. Following this, audit committee Chairman M Damodaran had sought an independent review by the EY in March. While Bhatia had claimed the EY report did not find any substantive evidence to prove the allegations, except some procedural ones, Gangwal alleged the report had not been shared with the full-audit committee and the full board.
The bitter spat between the co-founders became public when Gangwal sent a 23-page letter to SEBI Chairman Ajay Tyagi. Gangwal also asked the market regulator to examine the EY report on "questionable related-party transactions".
Meanwhile, the government has also sought explanations from the company on the allegations "corporate governance lapses". In its latest filing to the stock exchanges, the company said it had received a communication from the Ministry of Corporate Affairs (MCA) on Wednesday.
"The Registrar of Companies (RoC), National Capital Territory of Delhi & Haryana has sought certain information/explanations in relation to Gangwal's complaint. The company will respond to MCA within the prescribed period," the filing said. The explanation has been sought under Section 206(4) of the Companies Act, 2013, which provides powers for the ministry to call for information, inspect books, and conduct inquiries.
Edited by Manoj Sharma