Contact Your Financial Adviser Money Making MC
7
November 2016
 |
| Air Asia (The Total Investment & Insurance Solutions) |
After Cyrus
Mistry's letter to the directors of Tata Sons, which mentioned fraudulent
transactions of Rs22 crore involving non-existent parties in India and
Singapore, much more information has begun to spill into public domain. For
starters, some details about the forensic audit carried by Deloitte Touche
Tohmatsu India into the affairs of AirAsia India Ltd (AAIL) are available. The
audit found several payments to entities that have not provided any services to
the carrier as well as personal expenditure of its former chief executive Mittu
Chandilya being billed to the airline. AAIL is a joint venture between Tata
Sons Ltd and AirAsia Investment Ltd. The
Total Investment & Insurance Solutions
Documents
reviewed by Moneylife reveal a possible nexus between Chandilya and one
Rajendra Dubey, who allegedly assisted the CEO since August 2013 in liaison
activities "...in setting up meetings with Chief Ministers (CMs) and
politicians across the country."
There was no
direct contract or payment between Dubey and AirAsia India, we learn. Moreover,
Deloitte reports that "Payments amounting to Rs12.28 crore made against
invoices of HNR Trading, a Singapore-based entity where Dubey is a director,
for government or regulatory framework. No evidence of actual services
provided." The Total Investment
& Insurance Solutions
AAIL had
just a 'plain paper agreement' with HNR with various invoice formats, and one
instance of invoice contents being revised based on inputs from Venkatesan S
(finance), the report says.
It says,
"Anomalies in appointment process of two other entities where Dubey is a
director (ECS Cargo and RRT), which provide services to AAIL. We have been
provided with a mail from Amar Abrol dated 8 September 2016 that the contract
with ECS has been terminated with immediate effect."
"Payments
to HNR were reportedly made by the finance team on the direction of Mittu
Chandilya, though Venkatesan S mentioned he was not comfortable releasing the
payments."
Dubey was,
however quoted in a report by Economic
Times referring to
the findings as "baseless information". An email sent to Mr Debashis
Ray, who is heading communications for the Tatas had not been responded to at
the time of publishing this report. We had asked Mr Ray if the Tatas have any
comments to make on reports about Air Asia; we will update this report if and
when we hear from them.
The Deloitte
report also exposes a payment of Rs10.05 crore to Link Media Immigration
Services Pvt Ltd, allegedly for rendering 'media services'. However, the
company apparently "does not feature in the database of Registrar of
Companies (RoC)". "Even site visits to three addresses of Link Media
Immigration Services revealed no business establishment. The entity closed down
its tuition centre and visa consultancy two years ago. Payments made on the
direction of Mittu Chandilya. Enquiries revealed there were significant
financial transactions between father of Mittu (Chandilya, the then CEO) and
Link", said sources with access to the report. The Total Investment & Insurance Solutions
Mittu
Chandilya is understood to have billed an amount of Rs1.63 crore in personal
expenses to the company, is one of Deloitte's findings. These expenses included
family travel and stay, personal expenses, the lease of cars, appointment of
two drivers, payment of road tax on a personal vehicle, purchase of designer
clothes and furniture and for buying iPhones.
AirAsia
Berhad's CEO approved claims (of Chandilya) of about Rs48 lakh, while other
expenses like that of drivers, car lease, purchase of clothes were directly
approved by Chandilya, finds Deloitte.
Sources tell
us that several airline employees were interviewed by the forensic auditor.
These included employees who had attempted to blow the whistle on the goings-on
at AirAsia. The employees are understood to have expressed fear of retaliation,
which was strengthened by sudden exit of various head of departments at AAIL,
said the auditor. The vitiated atmosphere at the airline is indicated by
references to certain 'poison pen' letters (anonymous escalations) had gone to
the management, but no one reacted, nor was any action taken." The Total Investment & Insurance
Solutions
In April
2016, AAIL replaced Chandilya by naming Amar Abrol as its CEO.
Initially,
AirAsia Investment owned a 49% stake in the budget airline, followed by 30% by
Tata Sons and the remaining 21% was held by Telstra Tradeplaces Pvt Ltd owned
by Delhi-based Arun Bhatia. Last year, Tata Sons bought 11% of Telstra's stake,
taking its total holding in the low cost carrier (LCC) to 41%. The Total Investment & Insurance
Solutions
Earlier this
year, Bhatia had decided to exit the joint venture altogether. In an interview
that appeared in The
Economic Times on 11
December 2015, Bhatia was quoted as saying that the airline was being
controlled by its Malaysian partner, and that he would take up the matter
legally.
Bhatia's son
Amit is the son-in-law of LN Mittal, the owner of ArcelorMittal. Amit is
married to Vanisha Mittal, the only daughter of billionaire LN Mittal. The Total Investment & Insurance
Solutions
Tata Sons
increased its stake to 49% by buying 7.94% of the equity from Telstra. The Air
Asia website reveals R Venkataramanan (a former executive assistant of Ratan
Tata and a trustee on every one of the Tata Trusts) who is also a director on
AAIL, holds a 1.5% stake in the company in his individual capacity while former
TCS chief, S Ramadorai holds another 0.5% in his individual capacity. Ramadorai
is Chairman of AAIL. The Total
Investment & Insurance Solutions
The airline
currently operates flights from its current base in Bengaluru and Delhi to
Chandigarh, Goa, Guwahati, Imphal, Jaipur, Kochi, Pune and Visakhapatnam.The Total Investment & Insurance
Solutions
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