Jet Airways, Naresh Goyal under SFIO probe for 'siphoning off' money

The Serious Fraud Investigation Office (SFIO) is looking into the “general sales agents” model of Jet Airways in its probe of the aviation company, a senior official told Business Standard.

The probe agency has found that the company’s vast network of sales agents across the globe was not independent of Jet Airways and several of these entities were linked to its founder, Naresh Goyal.

When venturing into a new or developing market or cutting costs in an existing market, airlines choose general sales agents (GSAs) as their representatives to offer services and products without investing in their offices and teams.

Goyal’s GSA Jet Air Travels also acted on behalf of Jet Airways in multiple countries. But investigative agencies have said these agencies were used by Goyal to siphon off the company’s money.

“The money has been shown as outgoing payments to these agents but in many cases it was just a front for the company itself… There are many irregularities under investigation,” a person close to the matter said.

This is among three to four methods Jet allegedly used.

The agency has questioned Goyal on several occasions. 

The agency has also sought information from bank officials, auditors, and directors on the board of the company. The government ordered a probe into Jet Airways and its group companies for allegedly diverting funds, indulging in malpractices, and other financial irregularities found during its inspection in July.

The agency had been directed to complete investigation by December and submit its report to the government. As the SFIO probe widens to Jet’s group companies, including JetLite, Airjet Ground Services, Airjet Engineering Services, Airjet Training Services, Airjet Security and Allied Services, and Jet Privilege, the case is likely to remain under investigation beyond the six-month deadline.

Jet Airways stopped operations in April this year, landing the company in the insolvency and bankruptcy process in June. Revival seems unlikely because Grant Thornton, the resolution professional appointed to run the bankruptcy process, has been unable to get a serious bidder to take over the company.

Sources said banks were mulling liquidation and discussions on this had started.

The Enforcement Directorate (ED), which is investigating Jet Airways and its group companies, has alleged that Goyal “structured” a number of tax-evading schemes and salted away huge funds to foreign jurisdictions.

The ED’s initial probe indicated Goyal was likely to be the beneficial owner of some bank accounts abroad with huge deposits.

Inputs from Arindam Majumder