Now, Tata’s AirAsia deal will be ‘closely watched’ after Cyrus Mistry’s fraud allegations
“We are waiting for any input from any quarter,” Civil Aviation Secretary R N Choubey said, adding “we have not received anything so far”. Mistry raised “ethical concerns” in Tata group’s aviation joint venture with AirAsia and alleged that forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent entities in India and Singapore.
“If anything new is brought to the ministry attention, appropriate authorities will look into it,” another civil ministry official said on Mistry’s allegations against AirAsia India. Mistry was removed abruptly as chairman of the Tata Group on Monday and replaced by his predecessor Ratan Tata, who will lead India’s biggest conglomerate for the next four months till a permanent replacement is identified by a specially- created committee.
Mistry’s family firm, Shapoorji Pallonji, is a construction major and one of the largest stakeholders in the Tata Group. In a letter written to the Board members of Tata Sons yesterday, Mistry alleged that due to the interim Chairman Ratan Tata’s passion for aviation, Tata Sons board increased capital infusion in the aviation sector at multiple levels of the initial commitment.
“Board members and trustees are also aware that in the case of AirAsia, ethical concerns have been raised with respect to certain transactions as well as overall prevailing culture within the organisation.
“A recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore,” Mistry said in the letter. He went on to allege that “executive trustee Mr Venkataraman, who is on the board of Air Asia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study”.
It was only at the insistence of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information reports, the letter noted.
He claimed it was Tata who completed negotiations with Air Asia but early in his tenure as the Chairman of Tata Sons he was asked to table a proposal for the JV with AirAsia at a Tata Sons board meeting. Claiming that in the case of JV with AirAsia, he was able to extract a “promise of no debt to be raised at the level of JV, as well as limiting Tata Sons investment to 30 per cent of the USD 30 million equity”, Mistry said.