 "Chandilya, other former executives under scanner in AirAsia probe")
Questionable financial transactions involving former senior executives at AirAsia India prompted the Tata group to conduct a forensic audit of the accounts of the airline company earlier this year, it is learnt.
Among others, former chief executive and managing director of the airline Mittu Chandilya’s name came up in connection with this probe. But, dismissing the charges as “baseless”, Chandilya told Business Standard: “At no point during my tenure has AirAsia reached out to me for any clarifications….” He added: “I understand AirAsia India has been holding out that it’s investigating into the allegations of the like nature and therefore there’s nothing concrete as things stand.”
Chandilya was the first CEO of the company and he left the company in March this year upon the expiry of his contract. AirAsia India is a joint venture between the Tatas and Malaysia-based AirAsia Berhad.
According to sources, complaints regarding misappropriation of funds by former executives of the airline were brought to the airline management around the end of last year. The complaints pertained to reimbursement of expenses incurred by officials and their families. “Following the complaints, an internal audit was ordered by the airline’s management. The audit showed that business promotion, legal and professional service expenses incurred by the airline were of questionable nature and required further investigation,” said a source. However, a former executive told Business Standard all expenditure incurred by airline officials had approval from Tony Fernandes-led parent company AirAsia Berhad.
Queries sent to Tata Sons were directed to AirAsia India, which in a public statement on Monday said there was an ongoing investigation against former personnel involving irregular personal expense. “This has already been reported to and discussed at previous board meetings. AirAsia (India) will not make any specific reference to the matters investigated at this stage as it may be prejudicial to AirAsia or the personnel investigated,” the company said.
The issue of alleged “financial fraud” surfaced when Cyrus Mistry, soon after being ousted as chairman of Tata Sons, wrote to the Tata Sons board that there were ethical questions over certain transactions. He also wrote that audits revealed a fraud of Rs 22 crore, involving non-existent parties in India and Singapore. He added: “Executive trustee (in Tata Trusts)
R Venkataramanan, who is on the board of AirAsia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study.”
Sources indicated the board decided to appoint three independent directors – Ashok Sinha, former chairman of Bharat Petroleum Corporation; Maya Swaminathan Sinha, a retired officer of Indian Revenue Services; and Sudhakar Rao, a retired Indian Administrative Service officer – in April. But, two days before the annual general meeting on September 30, Rao sent a letter to the airline’s chairman S Ramadorai: “Owing to personal and unavoidable reasons, I am withdrawing my consent to be considered for appointment as an independent director on the AirAsia board.” Business Standard has reviewed the letter.
Mistry’s letter last week to the Tata Sons board also refers to Rao’s resignation but without naming him. The letter pointed out that it was only at the insistence of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information report. When contacted, Rao refused to comment on the matter. Ashok Sinha did not respond to calls. Following objection from independent directors, the airline appointed consultancy firm Deloitte to do a forensic audit of the accounts. A Deloitte executive confirmed the developments but refused to divulge more details.
“As per our consistent policy, Deloitte does not comment on client confidential matters,” a spokesperson said.
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Among others, former chief executive and managing director of the airline Mittu Chandilya’s name came up in connection with this probe. But, dismissing the charges as “baseless”, Chandilya told Business Standard: “At no point during my tenure has AirAsia reached out to me for any clarifications….” He added: “I understand AirAsia India has been holding out that it’s investigating into the allegations of the like nature and therefore there’s nothing concrete as things stand.”
Chandilya was the first CEO of the company and he left the company in March this year upon the expiry of his contract. AirAsia India is a joint venture between the Tatas and Malaysia-based AirAsia Berhad.
According to sources, complaints regarding misappropriation of funds by former executives of the airline were brought to the airline management around the end of last year. The complaints pertained to reimbursement of expenses incurred by officials and their families. “Following the complaints, an internal audit was ordered by the airline’s management. The audit showed that business promotion, legal and professional service expenses incurred by the airline were of questionable nature and required further investigation,” said a source. However, a former executive told Business Standard all expenditure incurred by airline officials had approval from Tony Fernandes-led parent company AirAsia Berhad.
Queries sent to Tata Sons were directed to AirAsia India, which in a public statement on Monday said there was an ongoing investigation against former personnel involving irregular personal expense. “This has already been reported to and discussed at previous board meetings. AirAsia (India) will not make any specific reference to the matters investigated at this stage as it may be prejudicial to AirAsia or the personnel investigated,” the company said.
The issue of alleged “financial fraud” surfaced when Cyrus Mistry, soon after being ousted as chairman of Tata Sons, wrote to the Tata Sons board that there were ethical questions over certain transactions. He also wrote that audits revealed a fraud of Rs 22 crore, involving non-existent parties in India and Singapore. He added: “Executive trustee (in Tata Trusts)
R Venkataramanan, who is on the board of AirAsia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study.”
Sources indicated the board decided to appoint three independent directors – Ashok Sinha, former chairman of Bharat Petroleum Corporation; Maya Swaminathan Sinha, a retired officer of Indian Revenue Services; and Sudhakar Rao, a retired Indian Administrative Service officer – in April. But, two days before the annual general meeting on September 30, Rao sent a letter to the airline’s chairman S Ramadorai: “Owing to personal and unavoidable reasons, I am withdrawing my consent to be considered for appointment as an independent director on the AirAsia board.” Business Standard has reviewed the letter.
Mistry’s letter last week to the Tata Sons board also refers to Rao’s resignation but without naming him. The letter pointed out that it was only at the insistence of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information report. When contacted, Rao refused to comment on the matter. Ashok Sinha did not respond to calls. Following objection from independent directors, the airline appointed consultancy firm Deloitte to do a forensic audit of the accounts. A Deloitte executive confirmed the developments but refused to divulge more details.
“As per our consistent policy, Deloitte does not comment on client confidential matters,” a spokesperson said.