They said the Enforcement Directorate (ED) has gathered details of the offshore entities, with which Jet Airways and its group companies entered into lease and maintenance and general sales agent (GSA) agreements, on the basis of information shared by the Toronto-based Egmont Group — an international network of 164 financial intelligence units formed for the purpose of combating money laundering as well as terror financing.
The Jet Airways founder and his wife, Anita, were questioned earlier this month on the basis of information shared by the Egmont Group, of which India is a member, according to the people. They said the couple was questioned in connection with alleged violations of the foreign exchange law in an equity deal with Jet Privilege Private Ltd (JPPL), which operated the airline’s loyalty and rewards programme.
“The probe has revealed that Jet Airways entered into related-party transactions, with most of the entities being ghost companies floated only for the purpose of creating fake transactions and thereby acting as a conduit to divert funds to tax havens or countries that have a liberal tax regime,” an official told ET on condition of anonymity. “This clearly amounts to violation under the Foreign Exchange Management Act (FEMA) as fake invoices were floated and the monies that should have come to India were routed abroad.”
Goyal was not reachable for comment.
He had stepped down as chairman of Jet Airways in March and the carrier ceased operations in April, after it ran out of cash. Jet Airways is currently undergoing resolution under the Insolvency and Bankruptcy Code.
“In the GSA matter, there are alleged irregularities in transactions between Jet Airways and its Dubai-based group firms,” said another person. “The airline was found to be paying commissions every year to its general sales agent in Dubai which was also part of a group unit. These may have been aimed at evading taxes to the tune of Rs 800 crore.”
Investigators have also found that Jet Airways leased aircraft from “ghost offshore companies” and paid lease rentals to these companies, which in turn diverted the funds to accounts linked to Goyal, alleged a third official.
Besides, the ED has summoned Goyal’s alleged aide, Hasmukh Gardi, a non-resident Indian based in Dubai, and has asked him to join the probe. On August 23, the agency had carried out raids at multiple locations, including the residence and offices of the Goyals. It had also carried out raids at the premises of Gardi, who allegedly invested in Goyal’s Isle of Man-based Tail Winds Corporation, which had controlled all the financial activities of Jet Airways. “He played a key role in the case and therefore his questioning is necessary to connect the dots,” said an official.
In a related development, while probing the alleged FEMA violations by Jet Airways and its group companies, the ED stumbled upon cases of foreign exchange law violations by Gardi’s relatives and has summoned them in these cases, said officials. They said these cases are not linked to the probe against Jet Airways.
The probe into Gardi’s accounts is said to have revealed that he is a shareholder of British Virgin Islands-based entity, Hanbury Global Limited. “A considerable amount of funds have been parked in tax havens. Gardi’s accounts in BVI are among them,” said an official.
Gardi is also suspected of having links with the underworld. According to information on the website of the International Consortium of Investigative Journalists, Hanbury Global’s intermediary is Mossack Fonseca & Co (UK) Ltd. An intermediary is a go-between for someone seeking an offshore corporation and an offshore service provider, usually a law firm or a middleman that asks an offshore service provider to create an offshore firm for a client.
Meanwhile, multiple revenue and enforcement agencies are probing Jet Airways for alleged irregularities. Other than the ED and the Income Tax department, the ministry of corporate affairs (MCA) is investigating the airline for alleged violations of the Companies Act. The ministry’s regional office concluded in a May report that several transactions were of a “suspicious nature”. These agencies suspect that the airline siphoned off more than Rs 8,000 crore through “fictitious contracts”.
While the current case pertains to the JPPL deal, the ED has confronted Goyal with documents related to 19 privately held companies, of which 14 are registered in India and five abroad, said the people cited earlier.
Based on a request by the MCA, a lookout circular was issued against Naresh Goyal and his wife Anita to ensure that they did not leave the country while the investigations were on. Following this, they were taken off a Dubai-bound plane in Mumbai on May