FDI rules violation: ED summons executives from Etihad in JetPrivilege case

New Delhi | Updated: July 5, 2019 7:03:35 AM

In 2014, the Abu Dhabi-based based carrier had picked up a 50.1% stake in Jet’s frequent-flyer programme for $150 million (over `900 crore at that time).

By Saurabh Kumar & Arun Nayal

The Enforcement Directorate (ED) has summoned Etihad Airways executives for questioning in connection with its investment in Jet Airways’ loyalty programme business, JetPrivilege, for alleged foreign exchange regulations violation.

According to ED sources, the then directors of JetPrivilege, representing Etihad on the board, have been summoned to give information on the five-year-old deal. Peter Baumgartner, Rangesh Embar and Harsh Mohan were appointed additional directors firm in March 2014 following the investment.

Queries sent to Etihad Airways did not elicit any response till the time of going to the press.

In 2014, the Abu Dhabi-based based carrier had picked up a 50.1% stake in Jet’s frequent-flyer programme for $150 million (over Rs 900 crore at that time).

“Etihad made an FDI in 2013-14. At that time a case was registered as it was found to be in violation with the FDI (foreign direct investment) norms. But it was considered by the then dispensation to be an investment not in the civil aviation sector, but into JetPrivilege which is not a civil aviation company. Now the case has been revived by ED after the recent events at Jet Airways,” a source said.

Jet Airways shut all operations on April 17, 2019, due to financial crunch. The airline’s lenders have taken Jet to the National Company Law Tribunal for resolution under the Insolvency and Bankruptcy Code after they failed to find a buyer for it. Before the 2014 deal, Jet was managing its frequent-flyer programme in-house.

The ED has earlier this year summoned executives of Jet Airways to understand the structure of the deal and whether Etihad had secured necessary permissions from the Foreign Investment and Planning Board, which was abolished in May 2017.

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