AirAsia has strongly refuted CBI (Central Bureau of Investigation) allegations against group CEO Tony Fernandes and others, terming the charges in the FIR as baseless, unsupported and unjustified. The Board of Directors of AirAsia Group Berhad (AAGB) said that the claims made against AirAsia Berhad, AirAsia India, group CEO Tony Fernandes, deputy group CEO Bo Lingam and other related parties are baseless and will be contested.
“The Board of Directors of AirAsia Group Berhad (AAGB) refutes strongly ALL the allegations made in the FIR as baseless, unsupported and unjustified and will vigorously challenge these allegations. We question the motives of the unnamed person, persons or organisation that lodged this FIR but we will co-operate fully with the Indian authorities in accordance with due process provided in law,” the company said in a press release. AirAsia added that CBI has registered an FIR based on information from an unnamed “reliable source”.
In May, CBI booked AirAsia Group CEO Tony Fernandes and others for alleged violation of norms in getting international flying licenses. According to the media reports, CBI carried out searches at six locations in Delhi, Mumbai and Bengaluru. The case relates to alleged violation of norms by directors of the aviation company for relaxation of 5/20 rules in the aviation sector to get licenses for international operations, and also violation of Foreign Investment Promotion Board (FIPB)rules. The 5/20 rule means that a company needs five years of experience and 20 aircraft to become eligible for the license.
Here are the allegations against AirAsia in FIR and company’s replies:
1) That AirAsia India, a joint venture between Tata Sons Ltd and Air Asia Investment Ltd, was indirectly controlled and operated by AirAsia Berhad via the Brand Licensing Agreement (BLA) between the parties thus violating the Foreign Investment Promotion Board norms which require substantial ownership and effective control to be in the hands of Indian nationals.
AirAsia replied saying: “This has been refuted by no less than the Director General of India’s Directorate General of Civil Aviation who extensively reviewed the Brand Licensing Agreement (BLA) and in a report dated 8 February 2017 filed in the High Court of Delhi stated that he did not find that the terms and conditions laid down in BLA “dilute the substantial ownership and effective control of AirAsia India being vested with Indian nationals.””
2) Unknown public servants have engaged in a criminal conspiracy involving AirAsia Berhad, AirAsia India, Tan Sri Tony Fernandes, Bo Lingam, 4 other named parties and unknown public servants and unknown private persons to expedite the approval process and change in aviation policies to suit AirAsia India by lobbying with stakeholders in the Government of India through non transparent means.
AirAsia replied saying: “AAGB would like to point out that it entered into a joint venture with Tata Sons Ltd to set up a low cost carrier in India carrying the AirAsia brand primarily because of the sterling reputation and integrity of Tata Sons Ltd in India. AirAsia Investments Ltd holds 49% equity in AirAsia India whilst the controlling shareholding of 51% is held by Indian entities, namely Tata Sons Ltd (49%) and 2 individuals on the Board (2%) who are Indian nationals. All required approvals were obtained through normal channels and it took more than a year to
get these approvals. Given Tata’s more than 100 years track record and that of AirAsia’s reputation, we refute any inference of impropriety in obtaining these approvals. AirAsia India as with others in the aviation industry lobbied The Government of India to remove the 5/20 rule that inhibits competition and the development of a healthy aviation sector that ensures for the benefit of the Indian consumer but this was done in compliance with the law and certainly without any unlawful payments. Further, AAGB has had an internal review and concluded that there has been no wrongdoing by either Tan Sri Tony Fernandes or Mr Bo Lingam.
3) Sham contracts were entered into with Travel and Total Food Services, HNR Trading Pte Ltd and DTA Consulting which was utilised for paying bribes to unknown public servants.
AirAsia replied saying: “Apart from the contract with HNR Trading Pte Ltd, the contracts referred to in the FIR were Entered in the ordinary course of business for services rendered on normal commercial terms. All contracts entered into by AirAsia India at the relevant time were under the watch of the then CEO, Mittu Chandiliya. AirAsia India has lodged an FIR against Mr Mittu Chandiliya in 2017 over the contract with HNR Trading Pte Ltd which was unauthorised by the company. AirAsia India has also submitted a forensic audit report by a leading accounting firm in India to show that funds were illegally siphoned out of the company through that unauthorised contract. We believe the Bangalore police are still investigating although much time has lapsed.”