MCA orders formal investigation into Jet Airways for alleged siphoning of funds

MCA orders formal investigation into Jet Airways for alleged siphoning of funds
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New Delhi, Aug 30: The Ministry of Corporate Affairs (MCA) has ordered its Regional Director for the Western Region to initiate a formal investigation into Jet Airways for allegedly siphoning off funds.
The airline will be investigated under Section 206 of the Companies Act, 2013. The order came after the ministry found financial irregularities and instances of funds being siphoned off in the company’s books.
“The company has received communication from the office of Registrar of Companies seeking response to a complaint received by their office. The company is taking necessary steps to submit its response in this regard,” a Jet Airways spokesperson told Moneycontrol.
It was the first to report on August 21 that a preliminary enquiry had been initiated against Jet Airways by the MCA.
Jet Airways has been dogged by financial stress and recently wrote to its employees asking them to a take a cut in their salaries. It blamed rising costs due to high crude oil prices, among other factors, for its stress.
Barring FY16 and FY17, the Naresh Goyal-promoted airline has not posted a profit for the past 11 financial years.
Arvind Gupta, who recently became famous as the whistleblower in the ICICI Bank-Videocon case, recently wrote to the Finance Ministry, SEBI, RBI and the Chief Vigilance Commission, complaining of irregularities.
Gupta questioned the audit committee’s inability to “prevent the promoters of Jet Airways from siphoning off Rs 5,125 crore from the companies”.
According to Gupta, the company, under its Jet Airways and Jet Lite brands, undertook transactions “under the guise of selling and distribution expenses and other means” with companies privately owned by the promoter.
However, the MCA’s initial probe was independent of Gupta’s complaint.