The government has ordered an investigation into grounded Jet Airways and its group companies for alleged diversion of funds, indulging in malpractices and other financial irregularities found during an inspection. The Ministry of Corporate Affairs has directed the Serious Fraud Investigation Office (SFIO) to probe the stressed company’s affairs and summon its founder Naresh Goyal next week, a senior official confirmed.
Jet, with more than Rs 8,000 crore of debt, flew for the last time on April 17 after it ran out of cash. Having failed to revive the airline, the lenders’ consortium, led by the State Bank of India (SBI), sent Jet to the bankruptcy court last month in a bid to recover the dues.
The MCA has ordered the SFIO probe under Section 212 (1) C of the Companies Act, based on its inspection report. The report indicated “prima facie” that the company was involved in “malpractices, mismanagement through siphoning of funds…preferential and related party transactions, prejudicial to public interest,” according to the order reviewed by Business Standard.
SFIO has been directed to complete the investigation within six months and submit its report to the government.
Jet’s group companies including Jet Lite, Airjet Ground Services Limited, Airjet Engineering Services Limited, Airjet Training Services, Airjet Security and Allied Services and Jet Privilege Private Limited are now under the lens of SFIO according to the order issued on July 4.
There have been allegations of fund diversions of more than Rs 5,000 crore out of the airline by Goyal through questionable transactions. In fact, several instances have come up in the MCA investigation where Jet is suspected to have written off investments in various subsidiary companies without any apparent reason, sources close to the development pointed out.