While the CBI may have swung into action only this week, officials at AirAsia India Ltd (AAIL) and its key shareholder Tata Sons Ltd knew of the dubious financial transactions with alleged lobbying firm HNR Trading as far back as 2016. They were also informed that the owner of the firm, a Rajendra Dubey, had a suspected association with an international terrorist.
This came to light when in 2016 consultancy firm Deloitte Touche Tohmatsu India was appointed to investigate certain malpractices at AirAsia India. The Deloitte special review report red-flagged questionable transactions with HNR Trading and other firms associated with Dubey.
But AAIL says its “board and the majority shareholder Tata group did not know about the existence of these entities.”
“All payments to HNR were made under the executive powers of the then CEO,” said the AAIL spokesperson to BloombergQuint, shifting the blame to Mittu Chandilya, chief executive officer of the airline from 2013 to 2016.
Chandilya is the one AAIL official so far not being investigated by the Central Bureau of Investigation, even though the agency has named other board members and Dubey as the accused.
What Went on at AirAsia India?
In September 2016, Deloitte submitted to AAIL a special review report of certain financial transactions at the company, a copy of which has been viewed by BloombergQuint. Deloitte was appointed after several whistleblower complaints pointed to financial irregularities, nepotism and vendor favouritism committed by the company’s then management.
In its special review, Deloitte examined a seven-month contract between AAIL and Singapore-based HNR Trading Pte Ltd in 2015.
It found that while HNR’s registered activities were value-added logistics and wholesale trade, AAIL had contracted it to provide consultancy services pertaining to “regulatory and government framework.” For this, HNR would receive a $184,000 monthly fee. The Deloitte report noted that the contract was signed on 15 May, 2015, by “Rachna”, who, according to the consulting firm’s checks, became a board director of HNR only in November 2015.
During its investigation, Deloitte was told that the purpose for the contract with HNR was to conduct a survey to apply for and obtain clearances for landing slots from Airports Authority of India. But no such survey report or documents were provided to the AAIL finance team or to Deloitte. And yet, the report noted, a payment of Rs 12.28 crore, including tax deducted at source, was made to HNR between December 2015 and January 2016.
HNR invoices “appeared to be computer printouts and not pre-printed stationery and did not carry any statutory registration numbers,” the report stated. Even the addresses provided on the invoices were of a residence occupied by two other individuals. The phone number mentioned on the invoices was a pre-paid number that was out of service.
Deloitte also investigated the ownership of HNR – 99.99 percent of the company was owned by Rajendra Dubey. The report stated that Dubey appeared to have played the role of a liaison agent and was instrumental in seeking government appointments for AAIL and Chandilya.
He was known to the senior leadership at Air Asia since at least 2013 – one email mentioned in the report suggested Chandilya introduced Dubey to Bo Lingam, a director on Air Asia India’s board in October 2013. According to Deloitte’s report, Dubey was also associated with ECS Cargo and RRT Services – both entities that were vendors to AAIL.
Deloitte also found irregularities in the way AAIL contracts were awarded to these two companies associated with Dubey.
The report also revealed Dubey’s links to an international terrorist. The consultancy found that Dubey was also a director and shareholder in Green IT Com Private Ltd along with Hamid Reza MalaKotipour.
Hamid had been identified by the US Department of Treasury as a “Specially Designated Global Terrorist” for suspected terrorist activities, the report pointed out. While such a name does feature on the US specially designated persons list even today, BloombergQuint was unable to independently ascertain if it is the same individual as referred to in the Deloitte report. A 2016 report by The Economic Times, though, quoted Dubey as saying he had partnered with MalaKotipour but had no knowledge of any such terror link.
In its conclusions, Deloitte stated in the special review that AAIL should review all contracts with vendors associated with Dubey and seek legal guidance on the payments made to HNR.
What Happened Next?
Two years after the report was submitted, the Central Bureau of Investigation has, among others, booked:
- Venkataramanan Ramachandran, director of AAIL and trustee of Tata Trusts
- Tony Fernandes, chief executive officer of AirAsia Group, Malayasia
- Bo Lingam, deputy group CEO, AirAsia Malaysia
- Rajender Dubey, director of HNR Trading.
The CBI has alleged criminal conspiracy and criminal misconduct — that together these individuals sought to influence aviation policy decisions by the government and expedite approvals for AAIL.
The CBI’s first information report states that in furtherance of the alleged criminal conspiracy, AAIL remitted Rs 12.28 crore to HNR Trading for a “sham contract on the basis of a bogus agreement on plain papers, which was utilised for paying bribe to unknown public servants of Government of India and others for securing permit for operation of international scheduled air transport services…”
To be clear, an FIR is a record of primary information received and is not conclusion of criminal action or guilt.
The only mention the FIR makes of Chandilya is that the agency had received information that he was “pressurised” by Tony Fernandes and Bo Lingam to pursue changes in regulatory policies.
But AAIL has put the blame squarely on Chandilya.
All payments to HNR were made under the executive powers of the then CEO. The AirAsia India board and the majority shareholder Tata group did not know about the existence of these entities. In no way was the AAIL board aware or approved of any payments to these entities.AirAsia India spokesperson to BloombergQuint
AAIL stated it had filed a criminal complaint in November 2016 against Chandilya and that the matter was under investigation. The company has also initiated civil proceedings in Bengaluru, the spokesperson said.
Chandilya referred BloombergQuint’s queries to his attorney who has yet to respond.
Deloitte said it could not comment due to client confidentiality. BloombergQuint was unable to reach Dubey.
A media statement issued by Venkataramanan denies any involvement in any illegalities.
(This article was first published on BloombergQuint)
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