CBI books Air Asia CEO Tony Fernandes, others in flying licence case
Air Asia Group CEO Tony Fernandes allegedly lobbied with government servants for clearances, change in regulatory policies and the removal of existing rules for getting international flying licenses.Updated: May 29, 2018 22:40 IST
Hindustan Times, New Delhi
The Central Bureau of Investigation (CBI) on Tuesday booked AirAsia’s group chief executive officer (CEO) Anthony ‘Tony’ Fernandes, who is one of the richest men in Malaysia, and five others, accusing them of “intentionally” choosing to beat the legal framework and aviation sector policies in India to secure some mandatory approvals for the airline “through non-transparent means” and attempting for a “removal/modification of 5/20 rule.”
The others named in the federal investigation agency’s first information report (FIR) are lobbyist Deepak Talwar; Tharumalingam Kanagaringam (Bo Lingam), who is deputy group CEO of AirAsia Berhad, Malaysia; Rajender Dubey, director of HNR Pte. Ltd, Singapore; Sunil Kapur, chairman of Travel/Total Food Services; and R Venkataramanan, who besides being director in AirAsia, is also managing trustee of the Sir Dorabji Tata Trust and is responsible for management and oversight of all the Tata Trusts.
Three companies, HNR Pte., AirAsia (India) Ltd, or AAIL, and AirAsia Berhad, Malaysia, and unknown officials of the ministry of civil aviation and the Foreign Investment Promotion Board (FIPB) are also named in the complaint.
The 5/20 rule was laid down by the civil aviation ministry in 2004 and it mandated that a domestic carrier should have operated for five years and have a fleet size of at least 20 aircraft before it could operate on international routes. In June 2016, the government scrapped the five-year part of the rule.
The CBI FIR, which has been seen by Hindustan Times, claims Air Asia broke India’s foreign investment rules and was in de facto control of the Indian company, although this isn’t allowed. It also alleges that efforts were made, by bribing government officials, to accelerate the scrapping of the 5/20 rule. The complaint dates back to events of 2013 and 2014 when the United Progressive Alliance government was in charge.
In a statement, Air Asia said it “refutes any wrong-doing and is co-operating with all regulators and agencies to present the correct facts.” It also pointed a finger at its former CEO Mitu Chandilya for what it termed irregularities. “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,” the statement said. Tata group said it had nothing to add immediately to the Air Asia statement.
Talwar could not be reached for comment. Emails sent to Sunil Kapur’s company remained unanswered while AirAsia Berhad referred to the statement issued by AAIL. Dubey could not be immediately reached for a comment because his contact details were not available.
AirAsia lndia submitted applications before the FIPB in February, 2013. It received a formal approval the following month and in September that year, the airline received a no objection certificate (NOC) too. It got the Air Operating Permit in May, 2014 for operating domestic flights in India.
At the moment, AirAsia is a joint venture between Tata Sons (49%) and the Malaysian carrier AirAsia Berhad (49%). Its chairman S Ramadorai (0.5%) and R. Venkataramanan (1.5%) hold the remaining 2% in the airline.
The CBI FIR claims AirAsia India was “indirectly controlled and operated” by AirAsia Group and particularly AirAsia,Berhad “violating the then various norms of then FlPB”.
“This structure was indirectly formalized through a “Brand License Agreement” signed between M/s. AirAsia (lndia) Ltd. (represented by Mr. Tony Fernandes) and M/s. AirAsia, Berhad (represented by Mr. Tharumalingam Kanagaringam @ Bo Lingam) on 17.04.2013 which indirectly made M/s. Air Asia (lndia) Ltd. a de-facto subsidiary rather than a joint venture,” alleged the FIR, filed on Monday.
Interestingly, this was the subject of a case in the Delhi high court, filed by Bharatiya Janata Party (BJP) leader Subramanian Swamy. In 2017, the Director General of Civil Aviation reviewed the brand licence agreement at the court’s instance and found nothing wrong in it. The case is still going on in the high court.
On Tuesday, Swamy tweeted: “Finally the CBI is presently raiding Air Asia offices including of the CEO’s. It is arising from my PIL in Delhi HC.” PIL is short for public interest litigation.
CBI stated that the Foreign Direct Investment (FDI) policy allows foreign airlines to own up to 49% shares in domestic airlines but effective management control must remain with the Indian partner.
“It is further revealed that the shareholders and Indian partners at the joint venture, including the board members, were not only aware of these intentions, but also consciously ensured violating the then FIPB norms, hence violation of FDI norms were prima facie found by giving effective management control to a foreign entity,” said the FIR.
First Published: May 29, 2018 15:28 IST