AirAsia India Summoned for FEMA violations
The fraud probe has been initiated after a revelation by Cyrus Mistry, who right after his ouster as Tata Sons Chairman, reported fraud transactions worth Rs 22 crore at AirAsia.
The Enforcement Directorate has summoned the officials of AirAsia India to investigate the airline’s alleged violation of the Foreign Exchange Management Act (FEMA) regulations
A case has been registered under Section 3 of the FEMA. The main focus of ED’s investigation will be on the irregularities in the company’s transactions involving non-existent parties, alleged to be located in India and Singapore.
The airline’s management and control are also under scanner. It is a joint venture between its parent company AirAsia Berhad in Malaysia and Tata Sons who own 49% each. Remaining two percent is divided between Chairman S Ramadorai and Director R Venkataramanan, who is also the managing trustee of Tata Trusts.
The main instigator of the investigation has been Cyrus Mistry, who right after his ouster as Tata Sons Chairman, reported fraud transactions worth Rs 22 crore at AirAsia through an email to Tata Sons Boards. His revelation was followed up by an article written by BJP leader Subramanian Swamy and a forensic audit conducted by Deloitte based on the allegations of misappropriation of funds by former company executives.
The Deloitte report brought to light an alleged payment of Rs 12 crore, which the airline made to HNR Trading for consultancy service without any proper agreement for the transaction and explanation on the nature of service provided.
Another questionable payment is of Rs 10 crore that the airline made to a company called Link Media Immigration Services Pvt Ltd for media services, which after the investigation was found to be non-existent.
What is FEMA?
It is an act of the Parliament of India with the main objective of facilitating external trade and payments and promoting the orderly development and maintenance of foreign exchange market in India.