Though the contents of the forensic audit conducted by accounting firm EY have not been made public, the people cited above said the audit had cast doubts on several transactions that were carried out with entities allegedly related to Goyal, the airline’s founder and then chairman.
On Saturday, Goyal, along with his wife Anita, was barred from leaving the country in a dramatic fashion, after the Emirates flight they boarded to Dubai was called back by immigration officials when it had started taxiing for take-off. They were offloaded because of a look-out circular (LOC) issued by the Intelligence Bureau at the request of the ministry of corporate affairs (MCA).
State Bank of India (SBI), the lead banker of the lenders’ consortium, had ordered a forensic audit of the books of Jet Airways to examine the feasibility of restructuring its debts and identify accounting problems, Mint reported on 14 December. EY was asked to probe the troubled airline’s books between 1 April 2014 and 31 March 2018.
Mint reported on 9 May that MCA was in the process of ordering a probe by India’s fraud investigator after discovering instances of alleged diversion of funds by the promoters of Jet Airways. This was based on an 8 May report by the Registrar of Companies, which had found alleged instances of violations of the Companies Act as well as unexplained fund trails.
SBI, Goyal, and Jet Airways didn’t respond to emailed requests for comment.
Some of the airline’s potential bidders, including private equity fund TPG Capital, had sought copies of the forensic report to ascertain risks during the due diligence process of Jet Airways, which is currently up for sale, the people cited earlier said on condition of anonymity.
“It is the prerogative of the lenders whether to share with anyone," said the first person cited earlier. “The lenders had collectively equity fund TPG Capital, had sought copies of the forensic report to ascertain risks during the due diligence process of Jet Airways, which is currently up for sale, the people cited earlier said on condition of anonymity.
“It is the prerogative of the lenders whether to share with anyone," said the first person cited earlier. “The lenders had collectively decided to not share the report with Jet’s bidders, but they were informally assured that any future legal implications will have no material impact on their investment."
The Serious Fraud Investigation Office is examining the books of Jet Airways to determine whether there was any diversion of funds.
“Money was allegedly paid out to certain distributors of Jet Airways in Dubai. These distributors were connected to the promoter group," said a third person with direct knowledge of the matter. This person did not go into the details of these transactions.
In November 2018, the government had modified LOC regulations. Following the changes, public sector bankers can request an LOC in case of a wilful defaulter.
So far, Goyal has not been labelled a wilful defaulter and has been cooperating with the lenders to find a new investor for Jet Airways.
In November, Tata group, which was in talks to buy a controlling stake in Jet Airways, sought a change of almost all of the airline’s existing vendors as a precondition for any potential investment in it, apart from seeking the removal of Goyal from all executive roles at the carrier, Mint reported in March. The Enforcement Directorate is also studying preliminary findings in a case of alleged violation of the Foreign Exchange Management Act at Jet Privilege, Mint reported on 9 May.