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Last Updated : May 29, 2018 09:37 PM IST | Source: Moneycontrol.com

CBI books AirAsia CEO Tony Fernandes, others on corruption charges

The case relates to alleged violation of norms by directors of the aviation company for relaxation of 5/20 rules in the aviation sector to get licenses for international operations, as well as violation of Foreign Investment Promotion Board (FIPB)rules, the CBI has alleged.

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The CBI registered a case against AirAsia Group CEO Tony Fernandes and others over alleged violation of norms for getting international flying licenses, officials said today.

The investigative agency said officials related to AirAsia colluded with unknown government officials during the UPA rule and tried to lobby with civil servants later to have the 5/20 rule amended.

The first information report (FIR) filed by the CBI said that after lobbying by AirAsia officials, a Cabinet note was floated in February 2014 to amend the 5/20 rule. The policy decision could not be approved as the model code of conduct kicked in soon after when the dates for the Lok Sabha elections were announced, according to the FIR.

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The 5/20 rule, which came into effect in 2004, stipulated that a carrier needs to be in operation for five years and possess 20 aircraft to become eligible to fly abroad.

The NDA government amended the rule in June 2016, removing the 5-year operation clause, though the CBI FIR does not make it clear whether it says the policy change was effected through corrupt practices.

The FIR names Tony Fernandes, AirAsia India Director R Venkataraman, aviation consultant Deepak Talwar, Rajendra Dubey (director of Singapore-based HNR Trading), and unidentified public servants.

It further talks about payments to the tune of Rs 12.28 crore that were remitted to India with an intention to bribe officials.

AirAsia ownership structure violation of norms

The CBI also alleged that the Malaysia-based AirAsia group violated FIPB and FDI norms by giving effective management control to a foreign entity, and making AirAsia India Limited a defacto subsidiary rather than a joint venture.

AirAsia India is a joint venture between Tata Sons (49%), AirAsia Berhad (49%) and others (2%).

Rules governing the sector dictate that effective management control of aviation companies be vested with an Indian management. The CBI FIR said that this was flouted when AirAsia Berhad signed a “brand licence agreement” in 2013 with AirAsia India – through which the latter effectively ceded control to the Malaysian JV partner.

AirAsia India has 18 aircraft as of now.

AirAsia India response

“AirAsia India refutes any wrongdoing and is cooperating with all regulators and agencies to present the correct facts,” the company’s director Shuva Mandal said in a statement. “In November 2016, AirAsia India had initiated criminal charges against its ex-CEO and had also commenced civil proceedings in Bangalore for such irregularities. We hope to bring early resolution to all such issues.”

In 2016, AirAsia India had filed a suit against its former CEO Mittu Chandilya accusing him of “siphoning off” money by making payments to a bogus firm. This was after former Tata Sons Chairman Cyrus Mistry had accused AirAsia India of indulging in “certain fraudulent transactions”.

Chandilya on his part maintained that he was being made a scapegoat for the battle between the Tata Group and Cyrus Mistry.

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First Published on May 29, 2018 06:30 pm
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