AirAsia CFO admits lacunae in contract with non-existent parties

The contract made was very 'generic' unlike company's others contract

AirAsia India's chief financial officer (CFO) in his statement to Enforcement Directorate (ED) admitted certain lacunae in agreement entered into with Singapore-based HNR Trading for liaising with the government and Link Media Immigration Services Pvt Ltd for media services. 

The Enforcement Directorate, which is probing the AirAsia in connection with alleged violations of Rs 22 crore under Foreign Exchange Management Act (FEMA), recorded the CFO's statement last month.

According to ED sources, during his interrogation, he (CFO) admitted that the airlines agreement with the said parties or vendors were not in line with company's contract format.

"The contract made was very 'generic' unlike company's others agreement or contract," he said this during the statement record.

The forensic audit carried out by Deloitte revealed amongst other things, questionable payments of Rs 12.28 crore by the airline to HNR Trading for liaising with the government. 

Additionally, a payment of Rs 10 crore was made to an entity called Link Media Immigration Services Pvt Ltd for media services. 

But, the audit found no such company registered with the corporate affairs ministry and site visits to listed addresses revealed no such business establishment.

CFO Ankur Khanna though showed some reservations on ED queries as he was not the part of the airlines when the contract has been signed, said sources.

"Based on the statement, we have summoned former executives of AirAsia who was then in finance department and executed the contract," said an ED official.

"Besides, we are also looking the into the foreign direct investment (FDI) part between Tata Sons and Malaysia’s AirAsia Berhad," the official added.

AirAsia India is a joint venture of these two. Both own 49 per cent each in the airline, while the remaining two per cent is owned by chairman S Ramadorai and Director R Venkataramanan, who is also a managing trustee of Tata Trusts.

The move comes in the wake of Cyrus Mistry’s revelation of a Rs 22 crore “fraud” in AirAsia India and subsequent complaint by BJP MP Subramanian Swamy seeking an investigation.

An email sent to AirAsia remained unanswered.