CBI Names Tata Trusts’ Venkat In AirAsia India Corruption Probe

The Central Bureau of Investigation has booked AirAsia chief Tony Fernandes and others for bribing unnamed government officials to obtain a flying permit for his joint venture airline with the Tata Group and start international flights from the first day.

One name stands out among the rest: Venkatramanan Ramchandran, the trustee of Tata Trusts that control about two-thirds of Tata Sons Ltd., the parent of the Tata Group.

His name had also cropped up in a letter by Cyrus Mistry, who was unceremoniously removed as chairman of Tata Sons in October 2016. Mistry, referring to AirAsia India, had alleged that a forensic audit by Deloitte revealed fraudulent transactions worth Rs 22 crore with non-existent parties. Venkatramanan, a director on the board of the airline, had found them to be “non-material”. He had later filed a criminal defamation case against Mistry for “causing irreparable damage to his reputation”.

Venkataramanan, in a statement, said he as a non-executive director of AirAsia India has been wrongly named as an accused by the CBI on operational matters “where I had little or no role to play”. He said accusations against him find their “root in baseless allegations” made by Mistry and the Shapoor Pallonji Group in “revenge” legal actions.

Tata Sons and Malaysia’s AirAsia Berhad own 49 percent each in AirAsia India. Venkatramanan owns 1.5 percent and S Ramadorai, former chief executive officer of Tata Consultancy Services Ltd., holds 0.5 percent.

Tata Sons declined to respond to BloombergQuint’s queries.

A statement by AirAsia India Ltd. said it “refutes any wrongdoing and is cooperating with all regulators and agencies to present the correct facts.” “In November 2016, AAIL had initiated criminal charges against its ex-CEO and had also commenced civil proceedings in Bangalore for such irregularities. We hope to bring early resolution to all such issues,” said the statement quoting Shuva Mandal, director at AirAsia India.

The CBI said the first information report, uploaded on its website, was prompted by a tip off from a source. The agency didn’t disclose the name. All those named in the FIR have been booked under Section 120-B of the Indian Penal Code and the Prevention of Corruption Act, 1988.

Here’s the list of the people and entities named in the FIR:

• Venkatramanan Ramchandran, director at AirAsia India and a trustee of Tata Trusts.
• Anthony Fernandes, group chief executive officer, AirAsia Group, Malaysia.
• Tharumalingam Kanalingam, deputy group chief executive officer, AirAsia Group, Malaysia.
• Rajendra Dubey, Director at HNR Pte Ltd., Singapore.
• Sunil Kapur, chairman, Travel/Total Food Services.
• Deepak Talwar, principal and founder, DTA Consulting
• HNR Pte Ltd.
• AirAsia (India) Ltd.
• AirAsia Berhad, Malaysia.
• Other unknown public servants of the Ministry of Civil Aviation, FIPB and private persons.

Who Controlled AirAsia India?

AirAsia India was indirectly controlled and operated by AirAsia Berhad, violating the norms of the erstwhile Foreign Investment Promotion Board, according to the CBI. The government dismantled FIPB in 2017.

The structure was indirectly finalised through a ‘brand licence agreement’ signed between AirAsia Berhad and the Indian joint venture in April 2013. The pact made the Indian joint venture a de-facto subsidiary rather than a joint venture, the FIR said.

Then FIPB regulations allowed foreign airlines to hold 49 percent in a domestic carrier but the management control had to stay with the Indian partner. CBI has alleged that shareholders and the Indian partners were aware of this intention and consciously violated the then FIPB norm. They broke foreign direct investment rules by giving effective control of the airline to a foreign entity, according to the agency.

Lobbying Allegations

Fernandes-led Malaysian airline wanted the Indian joint venture to fly internationally from day one, according to the CBI. Venkataramanan, a Tata Sons nominee on AirAsia India board, lobbied to get all government approvals, including the FIPB clearance and a change in the 5/20 rule, the agency said. The rule, which mandated five years of domestic flying and 20-aircraft fleet to launch international operations, was scrapped in 2016 by the Narendra Modi administration.

Officials of the Civil Aviation Ministry and FIPB entered into a criminal conspiracy with Venkatramanan, Fernandes, Kanalingam and Dubey with the intent to help AirAsia India expedite the approval process and change aviation policies to suit the company, the FIR alleges.

A secret note was sent to the Cabinet in February 2014, and a supplementary note in March 2014 by the Civil Aviation Ministry, according to the agency. But this couldn’t be approved since the Election Commission announced the general elections the day the second note was sent.

The agency alleged that Fernandes employed Sunil Kapur as a lobbying agent and Kanalingam gave him the on-board catering contract as a quid pro quo without any negotiation.

The CBI said it received information that in 2015-16, AirAsia India remitted about Rs 12.23 crore to Singapore-based HNR Trading, owned by Deekap Talwar, for a sham contract on the basis of a bogus agreement. The amount was used to bribe government officials through Talwar and Kapur, the CBI has alleged.

(Updates an earlier version with Venkataramanan’s statement in the fourth para)