CBI books AirAsia CEO Tony Fernandes, others for corruption

Business Standard: Arindam Majumder: May 30, 2018

In a major setback for the Tatas, the Central Bureau of Investigation (CBI) has indicted top executives of Tata Sons and the airline company AirAsia Bhd for trying to bribe government officials in order to subvert aviation laws of the country for their venture AirAsia India.

The agency on Tuesday named Tony Fernandes, group CEO of AirAsia, Bo Lingam, former deputy group CEO of AirAsia Bhd, and R Venkataramanan, managing trustee at Tata Trusts in the FIR, alleging they paid money to middlemen for bribes to known public servants and others for securing air operator’s permit and for operation of international scheduled air transport services. Venkatramanan, director at AirAsia India, holds 1.5 per cent in the firm. The middlemen named in the FIR are Travel Food owner Sunil Kapoor, aviation consultant Deepak Talwar, director of Singapore-based SNR Trading Rajendra Dubey and Venkataramanan.

The FIR alleges the duo tried to bribe government officials for amending the 5/20 rule so that AirAsia India could become eligible to fly international from the first day. The 5/20 rule mandates that an airline should have 20 aircraft and be in business for five years to become eligible to fly abroad.

AirAsia India is a joint venture between the Tatas and Malaysia-based AirAsia. The rule was amended by the present government to abolish the condition of five years.

AirAsia India refuted the allegations, saying the company had itself registered a case against its first CEO Mittu Chandilya for the same irregularities. “The company had initiated criminal charges against its ex-CEO and has also commenced civil proceedings in Bengaluru for such irregularities,” said Shuva Mandal, director at AirAsia India.

In 2016, Chandilya, currently CEO of Adani Ports and Shipping, was named in a forensic investigation by AirAsia for having paid money to Rajendra Dubey for “government work.” Chandilya has denied the allegations.

The agency has named Dubey as the liaison agent who arranged meetings of AirAsia executives with government officials. “lnformation has further revealed that a secret note was sent on February 27, 2014, to the Cabinet to amend or remove the 5/20 rule for operation of international scheduled in civil aviation," the FIR says.

The investigating agency also said the airline, in contravention of foreign direct investment laws, was being controlled from Malaysia. Substantial ownership norms mandate that an Indian airline should be effectively controlled from India.

The agency said AirAsia India was a made a de facto subsidiary of AirAsia Malaysia through the Brand License Agreement. The Directorate General of Civil Aviation had earlier given a clean chit to the company in relation to foreign control.

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