Business

Naresh Goyal used Jet Airways funds for ‘personal enrichment’

Borrowings from a state-owned bank was used for purchasing furniture and apparel jewellery, says India’s economic intelligence agency

Jet Airways founder Naresh Goyal

By: easterneye.biz Staff

JET AIRWAYS founder Naresh Goyal used the money borrowed by the now-defunct airline for his “personal gains and enrichment,” India’s economic intelligence agency has said.

The Enforcement Directorate arrested Goyal on Friday (1) night following a complaint of a Rs 5.38 billion (£51 million) loan fraud filed by the state-owned lender Canara Bank.

A special court in Delhi sent the 74-year-old businessman to the ED’s custody till September 11.

The ED told the court on Saturday (2) that the loans taken by Jet Airways from the bank were used for purchasing furniture, apparel jewellery and other illegitimate purposes. Its funds were also used to pay the salaries of Goyal’s residential staff and meet the operational expenses of a production company owned by his daughter, the ED said.

The money laundering case stems from a first information report (FIR) registered by the Central Bureau of Investigation (CBI) against Jet Airways, Goyal, his wife Anita and some former executives of his airline.

The FIR was registered on Canara Bank’s complaint which alleged that it sanctioned credit limits and loans to Jet Airways (India) Ltd to the tune of Rs 8.48 bn (£81m) of which Rs 5.38 bn (£51 million) turned into a non-performing asset in 2019.

Jet Airways diverted funds to its subsidiaries or misused them, it alleged.

According to the ED, the NPA was nothing but the “proceeds of crime” which were diverted and siphoned off.

The probe agency claimed that the funds were also siphoned off in the garb of professional and consultancy fees paid to various persons/entities.

An audit report of Ernst & Young (EY) showed that Rs 94.6m (about £910,000) was paid to Goyal’s family members – Anita, daughter Namrata and son Nivaan from the accounts of Jet Airways for various purposes between 2011-12 and 2018-19.

These transactions had no rationale and were carried out with the “ulterior motive” of diverting company funds for “personal gains and enrichment”, it said.

Citing the audit report, the ED said it appeared that salaries and operational expenses of Flimstoc Private Ltd, a production house owned by Goyal’s daughter, were “potentially borne” by Jet Airways.

Certain emails indicated that salary expenses of staff at Goyal’s Mumbai and Delhi residences were also “potentially borne” by the company, it said.

Payments also seemed to have been made from the company’s accounts for “certain movable assets like furniture accessories, apparel and jewelry” purchased by Goyal and his wife, the ED told the court.

Jet also diverted funds by making advances of Rs 25.47 bn (£240m) to Jet Lite Limited (JLL), a subsidiary, and subsequently writing them off, the ED told the court.

(With inputs from PTI)