MCA asks SFIO to conduct probe into Jet Airways on suspicion promoters siphoned off money

The Ministry of Corporate Affairs (MCA) has ordered Serious Fraud Investigation Office (SFIO) to conduct a probe into Jet Airways and its subsidiaries on suspicion that the promoters siphoned off money, sources told CNBC-TV18 on Thursday.

“The government has found enough evidence of siphoning off of funds and thus it warrants SFIO probe. The report of the Western Regional Director was submitted earlier this week and only after a detailed examination of the report, such a decision has been taken by the ministry,” said the sources, who did not want to be named.

SFIO has been asked to look at the case at the earliest, they added.

The development comes a day after the Enforcement Directorate (ED) began a probe on Etihad’s 2014 investment in JetPrivilege Private Limited (JPPL). The ED has asked its officials to begin a probe under the provisions of Foreign Exchange Management Act (FEMA) for the foreign direct investment received by the company.

The Mumbai-based Western Regional Director was inspecting the books of accounts of Jet Airways and its subsidiaries, which was ordered last year. The inspection was initiated eight months after the ministry directed it for such a probe to ascertain if there was any diversion of funds. The Registrar of Companies (Mumbai) was also roped in, in August 2018, after the company deferred its first quarter FY19 results.

After flying for over 25 years, Jet Airways on April 17 announced that it was suspending both, domestic as well as international operations temporarily, as the lenders refused to accept its request for an urgent infusion of funds.

About 20,000 employees of the airline were left in the middle of nowhere after it announced the suspension of operations. Though some have been hired by SpiceJet and others, there are many still struggling to make the ends meet. The airline, saddled with roughly Rs 8,400 crore of debt, has been defaulting on payments to its employees as well as lessors.

The bidding process' outcome is expected to be known by May 10.