On Friday, September 1, Naresh Goyal, the founder of Jet Airways was arrested in an alleged ₹ 538-crore money laundering case pertaining to loans and credit lines granted to the airline by Canara Bank.
According to the Enforcement Directorate (ED), Goyal allegedly conspired with other accused to defraud Canara Bank by syphoning off bank loan funds through its companies and claiming false costs. He reportedly purchased properties in Dubai and the United Kingdom with the funds.
According to the ED, Naresh Goyal fraudulently diverted loan proceeds as pointed out by Ernst & Young’s Forensic Audit Reports, causing the bank a loss of Rs 538.62 crore.
The ED discovered that Naresh Goyal had made questionable spending of Rs 1152.62 crore as professional and consultancy fees. These costs included personal expenses for himself as well as his family members, in addition to unrecorded transactions credited to the promoters’ foreign accounts.
Moreover, it has been found that Jet Airways also diverted funds to offshore entities in Dubai, Ireland, and other tax haven countries, including the British Virgin Islands, under the guise of a General Selling Agents (GSA) commission. According to the ED, this commission was paid to associated parties and entities linked to Naresh Goyal and his associates.
According to the investigating agency, JIL’s total exposure from the State Bank of India-led consortium was roughly Rs 6,000 crore.
The probe agency also alleged that agreements were reached with various General Selling Agents (GSAs) whose directors were relatives of Naresh and Anita Goyal. A significant amount of the approximately Rs 3,000 crore paid as GSA expenses went to Jet Air LLC, Jet Air UK Limited, Jet Air Pvt. Ltd., and Jet Air INC. Naresh Goyal also owns 15% of Jet Air LLC, based in Dubai.
Notably, in July this year, ED officials raided numerous sites, including the Chartered Accountants and Consultants to whom JIL had made considerable payments over the years and who had been red-flagged in the forensic audit reports. The investigation agency gathered a considerable number of incriminating documents and called Naresh Goyal twice, but he failed to show up.
Amit Agarwal, the ex-CFO of Jet Airways, accused Naresh Goyal’s secretary, Jennifer D’Silva, in his statement to the ED, of sanctioning payments to dubious consulting and professional businesses with Naresh Goyal’s consent and without communicating with Jet Airways’ finance department.
The audit report of Ernst & Young revealed that an amount of Rs 9.46 crore was given to Naresh Goyal’s wife Anita, daughter Namrata, and son Nivaan from JIL accounts in 2011-2012 and 2018-2019 for multiple reasons.
Whilst Naresh Goyal was the chairman of Jet Airways, the company diverted cash by providing advances to JIL’s subsidiary Jet Lite Limited (JLL) worth Rs 2,547.83 crore, which was then written off by making provisions.
Canara Bank had undertaken a forensic audit of accounts belonging to the companies of Naresh Goyal between April 1, 2011 and June 19, 2019. Consequently, the alleged money diversion and rigging came to the fore. The bank alleged that the company’s forensic audit found that Goyal had paid Rs 1,410.41 crore in commission to his other companies.
As Naresh Goyal refused to comply with the probe, ED authorities issued a fresh summons and took his statement at his Delhi house on September 1. The investigation agency emphasised that enough time had passed since their initial request as they reiterated their demand for the documents.
When questioned about his repeated absences from ED officials during earlier summons, Naresh Goyal remained evasive in his responses, causing additional delays in the inquiry. He was then detained, and a special PMLA court in Mumbai remanded him in ED custody until September 11.
It is pertinent to recall that on May 3 this year, the Central Bureau of Investigation (CBI) filed an FIR against Jet Airways, Naresh Goyal, his wife Anita, and certain former business executives after Canara Bank alleged a ₹ 538-crore fraud. Following this, a money laundering case was registered. Canara Bank informed the agency and stated that it had sanctioned credit limits and loans totalling 848.86 crore to Jet Airways (India) Ltd (JIL), of which 538.62 crore had not been paid back.