Government Probing Financial Lapses At Jet Airways, Says Official

The government is examining whether promoters of Jet Airways (India) Ltd. are involved in financial irregularities as alleged against Vijay Mallya, when he was at the helm of the now-defunct Kingfisher Airlines, a government official said on the condition of anonymity.

The Prime Minister’s Office has sought responses from the financial markets division of the Department of Economic Affairs and Department of Financial Services to assess if financial irregularities at Jet Airways are similar to that of Kingfisher Airlines, the official cited earlier said.

The responses were sought by Principal Secretary to Prime Minister Nripendra Misra after a letter addressed to the Prime Minister’s Office by former Union Secretary EAS Sarma sought to know whether promoters of Jet Airways have been allowed to leave the country, and if the government was aware of their whereabouts.

BloombergQuint has reviewed the letter addressed to Misra.

The letter was received by Misra on April 26, and responses were sought from the two departments under the finance ministry on May 7, the official said.

Jet Airways’ promoters Naresh Goyal and Anita Goyal were stopped from leaving the country on Saturday following a lookout circular issued by the Ministry of Corporate Affairs.

A text message sent to Misra did not elicit a response.

The letter by Sarma sought information on whether promoters of the crisis-hit Jet Airways laundered money to overseas accounts. It also questioned the role of independent directors on the airlines’ board, and if any action was taken against them by the Ministry of Corporate Affairs.

“There are striking similarities between the two cases of Kingfisher Airlines and Jet Airways,” Sarma told BloombergQuint over the phone. “Both represent failure of governance on multiple fronts and inordinate delays on the part of the authorities in dealing with the Jet Airways crisis.”

“Clear signals of a serious crisis in Jet Airways were visible almost one and a half years ago,” Sarma said. “But, as in the case of Kingfisher, the auditors, the rating agencies and the public sector banks that lent money remained complacent, till the bubble burst, hurting taxpayers, thousands of Jet employees and lakhs of domestic and international passengers.”

Sarma said it is surprising that the promoter had almost succeeded in exiting the country.