Lobbying for 5/20 norm removal done without any unlawful payments: AirAsia Group
The Economic Times
AirAsia Berhad whose global CEO Tony Fernandes and Indian joint venture have been named in an FIR by the Central Bureau of Investigation, denied all allegations in the report of conspiracy, bribery and foreign management control.
“The Board of Directors of AirAsia Group Berhad (AAGB) refutes strongly all the allegations made in the FIR as baseless, unsupported and unjustified and will vigorously challenge these allegations,” it said in a statement.
“We question the motives of the unnamed person, persons or organisation that lodged this FIR but we will co-operate fully with the Indian authorities in accordance with due process provided in law,” it added.
“..all the allegations in the FIR are unfounded and are without any rational basis and are wholly inconceivable in the context of corporate governance norms in Malaysia,”
It also said the AirAsia Group board has had an internal review and concluded that there has been no wrongdoing by Fernandes or deputy CEO Bo Lingam also named in the FIR.
The Malaysian low fare carrier and salt-to-software conglomerate Tata Sons each own 49% in AirAsia India. The rest is owned by non-executive director R Venkataramanan and chairman S. Ramadorai.
The FIR alleged that sham contracts were entered into with entities called Travel and Total Food Services, HNR Trading Pte Ltd and DTA Consulting which was utilised for paying bribes to unknown public servants.
In its statement, AirAsia replied that apart from the contract with HNR, the others were entered “in the ordinary course of business for services rendered on normal commercial terms”.
“All contracts entered into by AirAsia India at the relevant time were under the watch of the then CEO, Mittu Chandiliya. AirAsia India has lodged an FIR against Mr Mittu Chandiliya in 2017 over the contract with HNR Trading Pte Ltd which was unauthorised by the company,” it said.
Chandilya recently resigned as the chief of Adani Group’s logistics arm.
“AirAsia India has also submitted a forensic audit report by a leading accounting firm in India to show that funds were illegally siphoned out of the company through that unauthorised contract,” it said.
The FIR has also raked issues of foreign management control over the Indian airline and a contentious brand licensing agreement. The agreement mandates that in lieu of using the AirAsia brand, AirAsia India has to consult it for almost all operational decisions right down to promotional fares. There should be a “preference” to AirAsia group companies while outsourcing functions. All of the Malaysian carrier’s existing agreements with group companies should be upheld. The document also says that Fernandes “will provide input and approve annual budgets for each airline within AirAsia Group including the Licensee (AirAsia India)”.
To be sure India’s aviation regulator the Directorate General of Civil Aviation gave it a clean chit in February 2017 after a court directed an examination of it the previous year.
The DGCA report said “he did not find that the terms and conditions laid down in the agreement dilute the substantial ownership and effective control of AirAsia India being vested with Indian nationals.” AirAsia’s statement on Tuesday said.
On the allegations that AirAsia conspired with public servants to expedite the process to change rules for flying abroad, it said that “all required approvals were obtained through normal channels and it took more than a year to get these approvals,”.
“Given Tata’s more than 100 years track record and that of AirAsia’s reputation, we refute any inference of impropriety in obtaining these approvals. AirAsia India as with others in the aviation industry lobbied The Government of India to remove the 5/20 rule that inhibits competition and the development of a healthy aviation sector that enures for the benefit of the Indian consumer but this was done in compliance with the law and certainly without any unlawful payments,” it said.
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