ED searches Naresh Goyal's Delhi, Mumbai premises

Jet Airways founder Naresh Goyal. (Photo by Reuters)

In fresh trouble for Naresh Goyal, the Enforcement Directorate (ED) on Friday conducted searches at the premises of the beleaguered Jet Airways promoter in connection with violation of foreign exchange law.

The searches were conducted at 12 places in Delhi and Mumbai, including residential premises of Goyal, under the provisions of the Foreign Exchange Management Act (FEMA) and are aimed at gathering additional evidence, officials said.

The Jet Airways, which is undergoing resolution process under the Insolvency and Bankruptcy Code, had shut operations on April 17 this year after running out of cash while a Ministry of Corporate Affairs (MCA) inspection report had found large-scale irregularities, including diversion of funds.

Goyal and his wife Anita were offloaded from a Dubai-bound plane in May on a Look Out notice (LOC) issued by investigation agencies against the Jet Airways Chairman. In May, senior officials of the airline were questioned by the ED.

The Jet Airways is facing an investigation on its USD 150 million investment of its foreign partner Etihad Airways in the Jet Privilege Pvt Ltd (JPPL), the frequent-flyer programme of Jet Airways. JPPL was incorporated in 2012 as a Jet Airways wholly-owned unit in 2012. However, later it was hived off as an independent entity.
In 2013, Etihad purchased 50.1% stake in JPPL, as it was considered as "air transport service firm" where FDI is allowed over 49% on the automatic route. In airlines, the FDI cap is 49%.

The ED is now looking at whether JPPL was hived off through proper procedure and whether Etihad had got necessary approvals before the investment. It is also looking whether this hiving off was to circumvent the FDI norms to ensure more investment from Etihad in the airline through a different route.

Investigators are also looking into the Income Tax Department's claims that the Jet Airways evaded taxes to the tune of Rs 650 crore. The agency is examining whether the airlines violated provisions of FEMA.

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