More than a year after the CBI began investigating the merger of Air India and Indian Airlines and the acquisition of 111 aircraft, Enforcement Directorate (ED) officials said Friday that the agency had registered four cases of alleged money laundering in the matter. Sources in the ED said the cases were based on four CBI FIRs lodged last year and have been registered under provisions of the Prevention of Money Laundering Act. NCP leader Praful Patel was the Civil Aviation Minister when the merger took place during the UPA-I rule. In his media interactions earlier, Patel had denied any wrongdoing and said all decisions had been collective.
“While probing a case of money laundering against corporate consultant Deepak Talwar, we stumbled upon some money trail that is linked to the entire matter of Air India. We have traced a payment linked to the Air India case to an entity linked to Deepak Talwar. The money involved is huge,” a senior ED official said.
Talwar is facing an ED probe in connection with alleged misuse of funds brought into his NGO Advantage India under the Foreign Contribution Regulation Act. He was not available for comment Friday. But in September 2016, when The Indian Express reported on the alleged irregularities involving his NGO, Talwar had said that the NGO had been set up by him around 17 years ago, and that he was no longer involved in its day-to-day functioning.
“All the donations we have received from the foreign companies have been accounted for and how does it matter where the money has come from if it is being used in the right manner? There is no wrongdoing here,” Talwar had said.
The four ED cases are related to the Air India-Indian Airlines merger, purchase of 111 aircraft from Boeing and Airbus at Rs 70,000 crore, alleged deliberate ceding of profitable routes and schedules to private airlines, and opening of certain training institutes with foreign investment.
In May last year, the CBI registered three FIRs in the matter and initiated a preliminary enquiry with regard to the merger of Air India and Indian Airlines. This PE was later converted into an FIR. The decisions with regard to the merger, purchase of aircraft and giving up profitable routes to private airlines, according to CBI, caused a loss of thousands of crores of rupees to the exchequer.
CBI spokesperson R K Gaur had then said the FIRs had been registered for offences of criminal conspiracy and corruption against unidentified officials of the Civil Aviation Ministry and Air India.
In a report tabled in Parliament in January 2012, the Comptroller and Auditor General (CAG) had flagged these irregularities and called the decision to acquire 111 planes by Air India “a recipe for disaster”, which should have raised alarm in the government. It said that the aircraft acquisition through debt had “contributed predominantly” to the airline’s massive debt liability.
The CAG had also called the merger of Air India and Indian Airlines “ill-timed” and pointed out that “the financial case for the merger was not adequately validated prior to the merger”.
“The entire acquisition (for both Air India and Indian Airlines) was to be funded through debt (to be repaid through revenue generation), except for a relatively small equity infusion of Rs 325 crore for Indian Airlines. This was a recipe for disaster and should have raised alarm signals in Ministry of Civil Aviation, Public Investment Board and the Planning Commission,” the CAG report said.
The CAG also flagged the “speed” at which the acquisition process for 68 aircraft was dealt with and observed that it was based on “flawed” assumptions. Given that the initial proposal was made in December 1996, the CAG said that the acquisition process took an “unduly long time” and only in January 2004 a plan was made to buy 28 planes, which was revisited and later increased to 68 aircraft.