India’s Enforcement Directorate, an agency of the Ministry of Finance that investigates financial crimes, arrested Jet Airways (JAI, Mumbai International) founder Naresh Goyal late on September 1. The following day, a court in Mumbai dealing with cases lodged under the Prevention of Money Laundering Act said he should remain in the agency’s custody until September 11.
As ch-aviation reported in July, the directorate’s money laundering probe is based on a Central Bureau of Investigation first information report (FIR) that was filed in May against the airline, Goyal, his wife, and a former director of the airline pertaining to an alleged INR5.38 billion rupee (USD65 million) fraud case filed by state-owned Canara Bank, which was among the former lenders to the airline.
The losses to a consortium of nine former lenders to the airline are much bigger, at INR59.51 billion (USD719 million), the directorate said in a statement dispatched to news outlets on September 2.
In its statement, the agency claimed that under Goyal’s leadership the carrier siphoned off funds to overseas entities in Dubai, Ireland, the British Virgin Islands, and other tax havens “in the garb of professional and consultancy fees”. These “dubious expenses to the tune of” INR10 billion (USD121 million), “went towards the personal expenses of Naresh Goyal and his family members,” the statement said.
Citing an Ernst & Young (EY) audit, the Enforcement Directorate said that, for example, INR90.46 million (USD1.1 million) was paid to Goyal’s family members including wife Anita, daughter Namrata, and son Nivaan from the accounts of Jet Airways between 2011 and 2019 for various purposes, transactions that had “no rationale, transactions made with the ulterior motive of diverting the amount for personal gains and enrichment.”
Additional payments were made to Filmstoc Pvt Ltd, a production house incorporated by Namrata Goyal, and “residential staff of Naresh Goyal in Mumbai and Delhi”, as well as from HD Gardi, a businessman allegedly associated with Goyal, “for certain movable assets purchased for Goyal and his wife in the form of furniture accessories, apparel, and jewellery,” the agency said. He also allegedly diverted funds via Jet Airways unit Jet Lite Limited worth INR25.5 million (USD308,000) and subsequently wrote off the amount by making an accounting provision, the agency claimed, among many other transfers now under suspicion.
Goyal kept misleading investigators, the directorate said, adding that his interrogation was necessary to unearth the larger conspiracy behind the fraud and siphoning off of proceeds and to identify and quantify the money trail.
Jet Airways collapsed in April 2019 with around USD1.2 billion in debts after running out of cash. It was India’s second-largest carrier by market share. Naresh Goyal has not, so far, commented publicly on the case.