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Monday, 27 May, 2019, 09 : 15 AM [IST]

Centre asks Jet’s lenders to share forensic audit report

As per a Mint report by Deborshi Chaki, Jayshree P. Upadhyay, lenders of Jet Airways (India) Ltd were asked by the government to share findings of a forensic audit report of the grounded airline in March, around the same time the company’s founder, Naresh Goyal, quit all executive roles, two people directly aware of the matter said.

Though the contents of the forensic audit conducted by accounting firm EY have not been made public, the people cited above said the audit had cast doubts on several transactions that were carried out with entities related to Goyal, the airline’s Founder and then Chairman.

On Saturday, Goyal, along with his wife Anita, was barred from leaving the country in a dramatic fashion, after the Emirates flight they boarded to Dubai was called back by immigration officials when it had started taxiing for take-off. They were offloaded because of a look-out circular (LOC) issued by the Intelligence Bureau at the request of the Ministry of Corporate Affairs (MCA).

State Bank of India (SBI), the lead banker of the lenders’ consortium, had ordered a forensic audit of the books of Jet Airways to examine the feasibility of restructuring its debts and identify accounting problems. EY was asked to probe the troubled airline’s books between April 1, 2014 and March 31, 2018.

SBI, Goyal, and Jet Airways didn’t respond to emailed requests for comment.

Some of the airline’s potential bidders, including private equity fund TPG Capital, had sought copies of the forensic report to ascertain risks during the due diligence process of Jet Airways, which is currently up for sale, the people cited earlier said on condition of anonymity.

“It is the prerogative of the lenders whether to share with anyone," said the first person cited earlier. “The lenders had collectively equity fund TPG Capital, had sought copies of the forensic report to ascertain risks during the due diligence process of Jet Airways, which is currently up for sale, the people cited earlier said on condition of anonymity.

“It is the prerogative of the lenders whether to share with anyone," said the first person cited earlier. “The lenders had collectively decided to not share the report with Jet’s bidders, but they were informally assured that any future legal implications will have no material impact on their investment."

The Serious Fraud Investigation Office is examining the books of Jet Airways to determine whether there was any diversion of funds.

“Money was paid out to certain distributors of Jet Airways in Dubai. These distributors were connected to the promoter group," said a third person with direct knowledge of the matter. This person did not go into the details of these transactions.

In November 2018, the government had modified LOC regulations. Following the changes, public sector bankers can request an LOC in case of a willful defaulter.

So far, Goyal has not been labeled a willful defaulter and has been cooperating with the lenders to find a new investor for Jet Airways. (Source: Mint)



 
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