ED arrests Jet Airways founder Naresh Goyal in bank fraud case

The money laundering case stems from an FIR of the CBI against Jet Airways, Mr. Goyal, his wife Anita and some former company executives in connection with an alleged ₹538-crore fraud case

September 01, 2023 11:38 pm | Updated September 02, 2023 01:13 pm IST - New Delhi

File photo of Naresh Goyal.

File photo of Naresh Goyal. | Photo Credit: PTI

The Enforcement Directorate on September 1 arrested Jet Airways (India) Limited’s founder chairman Naresh Jagdishrai Goyal, in connection with an alleged loan fraud involving about ₹538.62 crore of the Canara Bank.

Mr. Goyal had been summoned to the ED’s Mumbai office for recording his statement. He was arrested following questioning.

The ED probe is based on a case registered by the Central Bureau of Investigation (CBI) in May. Among those named as accused were the company, Mr. Goyal, his wife Anita Naresh Goyal and Gaurang Ananda Shetty.

As alleged, the company was initially sanctioned a working capital limit of ₹126 crore and inland letter of credit/financial bank guarantee limit of ₹100 crore for different purposes. It also received ₹400 crore as term loan for operational expenditures and ₹200 crore for aircraft reconfiguration, introduction of new routes, business promotion and other associated activities, besides ₹17.52 crore as short-term loan.

The First Information Report alleged that since August 2018, the company started claiming that it had been facing liquidity and operational issues, and was not able to service the payment or repayment obligations. In October 2018, the lenders decided to invoke the inter-creditor agreement provisions and the State Bank of India was appointed the leader.

Jet Airways was told to submit a resolution plan and infuse ₹3,500-₹4000 crore. However, the conditions were not fulfilled and the company also defaulted on payment of instalments as on December 31, 2018. The banks then took the matter to the National Company Law Tribunal. In April 2019, Jet Airways had suspended its operations.

The Canara Bank said its loan account turned a non-performing asset on June 5, 2019. A forensic audit of the company’s financials during the check period from April 1, 2011 to June 30, 2019, subsequently detected alleged diversion and siphoning of funds.

As alleged, related parties were paid ₹1,410.41 crore out of the total commission expenses; and there was siphoning of funds through Jet Lite (India) Ltd. through advances or investments and then, the same written off. During 2011-18, ₹14,552.44 crore was extended as loan to Jet Lite and ₹13,529.62 crore was received in return, it was alleged.

The bank also alleged that Jet Airways was transferring borrowed funds to subsidiary/group entities through various ways. During the review period, ₹1152.62 crore was paid for professional and consultancy services. Of these, alleged suspicious transactions worth ₹197.57 crore were detected in case of the linked entities.

Over ₹420 crore was paid to the entities whose nature of business was different from the service description in their invoices raised on the company, as alleged.

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