Mosquito coil firm to diamond exporter, how Naresh Goyal ‘diverted’ Jet funds

The agency filed a prosecution complaint (equivalent to a chargesheet) against Goyal, his wife Anita, his companies and other entities earlier this week in connection with its money laundering probe into alleged Rs 6,000 crore bank fraud by JIL.

The agency has claimed that Goyal allegedly siphoned off funds by paying “irrational” and “inflated” commissions to general sales agents (GSA). Almost 50 per cent of these funds were cornered by his own companies. Under him, JIL also had transactions with some professionals and consultants with whom there was no evidence of services provided.

Goyal’s counsel was not available for comment. However, following Goyal’s arrest in September, his lawyers, Aabad Ponda and Ameet Naik submitted that an interim stay was granted to him by the Bombay High Court in the proceedings related to fraud on Canara Bank. Observing that he had been called a fraud without being given an opportunity of being heard, they said the agency could not have arrested him.

They also submitted that the forensic report referred to by the agency was never shared with Goyal. This report — discussed in a joint lenders’ meeting in May 2020 — had said it appeared prima facie there was no conclusive evidence of fraud established by the forensic auditor.

Further, a group of inter-linked companies’ total revenues came entirely from doing business with Jet Airways. “During the course of investigation, it was revealed that payments were made to various professionals and consultants for the services rendered by them to the tune of 1,152 crore as per audited financials for the FY 2011-12 to FY 2017-18 of JIL,” the ED chargesheet has said.

Among these, one Pathak HD and Associates was hired for salary payout to senior managers in the company and paid a total of Rs 279.51 crore. PHDA, in turn, sublet the contract to SA Sangani & Associates (SAS), a company linked to it. As per financial statements of SAS, the nature of its business was “to carry on the business of manufacture, trade and deal in botanical products, mosquito coils, repellents, chemicals, pharmaceutical products and special purpose”.

But a forensic audit by E&Y revealed that payroll processing was to be initiated by SAS from April, 2018, onwards; however, the company itself was inaugurated two months later on June 13, 2018.

Similarly, one Choice Consultancy Services Private Limited (CCSPL) involved in infrastructure development solutions raised invoices to JIL “for advising on steps to be taken for improvement in credit rating of the Company”, the chargesheet has said.

Another company, Agromach Spares Corporation, which engages in “sales and services of spare parts of railway, construction machine and cranes etc”, raised invoices for “providing consultancy for evaluation, procurement and storage of spare parts for your aircraft engine during the FY 2016-17”.

Anmol Infraprojects (Al), the chargesheet alleged, was engaged in the “manufacture, export and import of coloured and polished diamonds” but raised invoices for “Fees Syndication/Referral/Solicitation Fin Funding”.

Apart from this, the forensic audit of JIL’s accounts found that Alpine Cooperate Advisory Services Private Limited and Novo Cooperative Advisors Private Limited provide direct and indirect tax related services to JIL. However, their total turnover was equal to the business they did with JIL.

It was also observed, the chargesheet alleged, that while the description of service rendered was “Consultancy fees towards GST Advice from time to time from 2016 to 2018”, GST laws were made effective only from July 1, 2017.

Also both the companies were found to be linked to Chaturvedi and Shah (CAS), who were the auditors of JIL. CAS had nine other related entities, including Pathak HD and Associates, which received total payment of Rs 420.43 Crore from JIL in the name of consultancy fees.

The forensic audit has also noted that though payments to the tune of several crores were made to consultants such as Shardul Securities Ltd, Colorado Corporate Advisors LLP, Pilot Consultant Private Limited, Manphool Exports Ltd, Dinesh Rao and Associates, Treystaa Services Private Limited among others, JIL could not provide any documentary evidence of services provided by them.

The most significant siphoning off funds, as alleged by ED, was done through payments to GSAs. According to the agency, despite the entire airline industry having moved to modern ticketing and accounting systems with the advent of internet, JIL continued with the “obsolete” GSA system where more than Rs 2,365 crore were paid to close to 100 GSAs hired by JIL.

Interestingly, almost 50 per cent (Rs 1,141.50 crore) payments went to JIL’s related entities. These included Jet Airways LLC, Dubai; Jet Airways of India INC, USA; Jet Airways Pvt Ltd (JAPL); and Jetair (UK) Limited, United Kingdom, which were all directly or indirectly linked to Naresh Goyal.

Jet Airways LLC, Dubai, where Goyal had 51 per cent stake along with 15 per cent held by associate Hasmukh Gardi, alone received Rs 415 crore in commissions. Gardi’s name had featured in Panama Papers offshore accounts data. The company had been hired as Global GSA, despite JIL GSAs being in every country of its operation. Over Rs 230 crore also went to JAPL, Goyal’s seminal venture which was appointed as GSA for India.

JIL’s Thailand GSA, Geepee Air Service Limited, was found to be a company under management and control of Anju Shah and her daughter Nishita Shah who are relatives of Anita Goyal, the chargesheet has alleged.

“Therefore, it is evident from the above that Naresh Goyal has deliberately siphoned off revenues from JIL for his personal benefits by making inflated payments to the related entities specially JAPL when it was not discharging any duties of GSA,” the chargesheet said.

It also noted a curious agreement between JIL and the Department of Post for “pick up, carry, convey and deliver postal articles”. While JAPL was not mentioned in the agreement nor was involved in the whole process, it was paid a commission of Rs 3.44 crore between FY 2011-12 and FY 2018-19.

The Indian Express had earlier reported how JIL was made to pick up expenses of Goyal’s household staff, family members and fund the ventures of his daughter.