PMLA court remands Naresh Goyal to ED custody till September 11

The ED’s case is based on a May 3 FIR registered by the Central Bureau of Investigation against Jet Airways (India) Limited (JIL) founder Goyal, his wife Anita, former company executive Gaurang Ananda Shetty and unknown public servants and private persons in connection with the alleged fraud at Canara Bank

MUMBAI: The special PMLA court on Saturday remanded Naresh Goyal, founder of the grounded private airline Jet Airways, to Enforcement Directorate (ED) custody up to September 11 in connection with its money-laundering probe into an alleged ₹538-crore bank loan fraud.

Goyal, 74, was produced before the special court, where the ED counsel Sunil Gonsalves sought his custody for 14 days. The ED contended that Jet Airways had taken loans from a consortium of 10 banks to meet operational expenditure but ₹6,000 crore was still outstanding. (Anshuman Poyrekar/HT PHOTO)

The ED’s case is based on a May 3 FIR registered by the Central Bureau of Investigation against Jet Airways (India) Limited (JIL) founder Goyal, his wife Anita, former company executive Gaurang Ananda Shetty and unknown public servants and private persons in connection with the alleged fraud at Canara Bank.

Goyal, 74, was produced before the special court, where the ED counsel Sunil Gonsalves sought his custody for 14 days. The ED contended that Jet Airways had taken loans from a consortium of 10 banks to meet operational expenditure but ₹6,000 crore was still outstanding.

Gonsalves said that a forensic audit showed that large sums of money had been diverted. “While Naresh Goyal was the chairman of Jet Airways, the company (JIL) diverted funds by way of making advances to Jet Lite Limited (JLL), the subsidiary of JIL, worth ₹2547.83 crore and subsequently writing off the same,” said the remand application. “It was also observed that JIL has paid various expenses amounting to ₹403.27 crore, which is not in tune with the GSA Agreement, as the expenses of General Selling Agents (GSA) were to be borne by GSAs themselves and not by JIL.”

The remand application said that further agreements were made with several GSAs, where relatives of Naresh Goyal and Anita Goyal were directors. “Of over ₹3,000 crore paid as GSA expenses, a substantial portion was made to related parties, viz Jet Air LLC, Jet Air UK Limited and Jet Air Pvt Ltd. Naresh Goyal is 15 percent shareholder in Jet Air LLC, Dubai,” stated the application.

The ED further stated that a huge amount had been siphoned off towards payment of professional fees and consultancy charges on the direct instructions of Goyal. For this, it referred to the statement of Amit Aggrawal, the former chief financial official of Jet Airways, who claimed that the consultancy fees were paid after direct instructions from Goyal by secretary Jennifer D’silva.

“(Naresh Goyal) said the legal consultancy services provided by those firms were critical for running the business, and there was no point in asking further questions. The finance department had absolutely no say in the approval of these payments to the consultancy firms,” reads the remand application.

The ED also referred to the statement of Vinay Garodia, audit partner of Ernst and Young, which stated that the salaries and operational expenses of M/s Filmstoc Pvt Ltd, a production house incorporated by Goyal’s daughter, Namrata Goyal, were potentially borne by Jet Airways. He also claimed that the furniture, jewellery and apparel expenses of Naresh Goyal and his wife were paid through Jet Airways.

As per the forensic audit report, funds were diverted from India to UK entities and in turn to Anita Goyal. Besides, the ED claimed, Goyal had also siphoned off money to various companies and trusts created by him, which are based in tax havens like Jersey and the British Virgin Islands. The report said that Goyal also acquired various properties in overseas countries, including Dubai and UK.

The remand plea was opposed by Goyal’s lawyers, Abad Ponda and Amit Naik, who contended that the probe had been stayed by the high court in a proceeding initiated on the complaints of the banks, calling Goyal a fraud without giving him a hearing. Besides, they added, the forensic report, on the basis of which the case was being probed, was never shared with Goyal.

Naik also contended that the report was discussed in a joint lenders’ meeting on May 8, 2020. “Members deliberated on the report and observed that prima facie it appeared that there was no conclusive evidence of fraud finally established by the forensic auditor,” Naik submitted. “Considering that the events of default indicated as triggers are not conclusive and are constrained by the business decisions of the company at that point of time, and in view of the above concluding remarks of the forensic report, it was agreed upon by all lenders to treat the report as ‘dealt with’ and (it was agreed that) individual banks would take it up with their internal authority for closure of the audit report.” In that case, Naik argued, why was there suddenly a change in stand?

Gonsalves responded to Goyal’s lawyers, saying there was no stay on the ED’s actions and investigation. Also, he added, the ED’s probe was not based only on the forensic report but also on other evidence and documents recovered in the searches conducted during the probe.