Jet Airways Defrauding Case: Naresh Goyal Questioned By ED

Naresh Goyal, the founder of Jet Airways, is being questioned several hours by the Enforcement Directorate (ED) in Mumbai for allegedly defrauding Canara Bank of ₹538 crore. The ED officials are inquiring about alleged account irregularities, the diversion of a portion of the loan amount to related companies as commission, and money laundering. They are also asking about seized documents related to funds transactions.

The Enforcement Directorate conducted searches in July 2023 at eight locations in Mumbai and Delhi as part of a money laundering case worth ₹538 crore. This case involves Naresh Goyal and others. The Central Bureau of Investigation (CBI) is already investigating a case against Goyal. The ED’s money laundering case is based on an FIR filed by the CBI, which accuses Goyal and others of defrauding Canara Bank of ₹538 crore.

CBI filed charges against Naresh Goyal

FIR filed by the Central Bureau of Investigation (CBI) against Goyal on complaint of Canara Bank chief general manager, recovery and legal section, alleging criminal conspiracy, criminal breach of trust and criminal misconduct causing the bank a wrongful loss of ₹538.62 crore.

According to Canara Bank, they had sanctioned a credit limit facility to Jet Airways, but the airline defrauded the bank of ₹538.62 crore. The bank alleges that it had provided credit limits and loans amounting to ₹848.86 crore to Jet Airways, with ₹538.62 crore outstanding. The airline diverted a portion of the loan to related companies as commissions.

A forensic audit of the company revealed fraudulent transactions involving fund diversion from the loan amount. Expenses listed as paid commissions to related companies actually included costs related to the Goyal family and other individuals involved in the scam. The airline had reported spending ₹11,152.62 crore on professional and consultancy expenses, with ₹197.57 crore of those transactions deemed suspicious during the investigation into the company’s financial records from April 1, 2011, to June 30, 2019. These entities had turnovers similar to the expense amounts recorded by Jet Airways under the guise of professional and consultancy expenses.

Jet Airways dealing with Canara Bank since 2005

According to the complaint, Jet Airways (India) Ltd (JIL)promoted by Tail Winds Ltd, an overseas company owned by Goyal and his associates, had been dealing with Canara Bank since 2005 and since August 2018 claiming liquidity and operational issues, the accounts turned NPA in 2019.

A forensic audit conducted by EY revealed that JIL had paid ₹1,410.41 crore to related parties of total commission expenses. The expenses of general selling agents (GSA) were paid by JIL amounting to ₹403.27 crore, which was not in tune with the GSA agreement.

The complaint also alleges that funds were allegedly siphoned off through Jet Lite (India) Ltd (JLL), a subsidiary, by way of making advance and investing and subsequently writing off of the same by making provision.

Funds to the tune of ₹2,547.83 crore were allegedly transferred by JIL to JLL as loan but were never paid back. Over ₹400 crore were allegedly siphoned off through payments made to professional and consultancy expenses.

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