The money borrowed by Jet Airways was misused by its founder Naresh Goyal for “personal gains and enrichment”, the Enforcement Directorate (ED) on Saturday told a Mumbai court while seeking his custody in a case of an alleged Rs 538 crore loan fraud, registered on a complaint filed by Canara Bank. The special Prevention of Money Laundering Act (PMLA) court sent 74-year-old Goyal in the ED's custody till September 11.
Seeking his remand, the ED claimed that the loans taken by now-defunct Jet Airways (India) Limited (JIL) from Canara Bank were used for purchasing things such as furniture, apparel and jewellery besides other illegitimate purposes. JIL's funds were also used to pay the salaries of his residential staff and meet operational expenses of a production company owned by his daughter, the ED said.
Goyal was arrested by the Central agency on Friday night under the PMLA following a long session of questioning at its office here. He was produced before the court around 12.30 pm on Saturday. The money laundering case stems from a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI) against Jet Airways, Goyal, his wife Anita and some former executives of his airline.
The FIR was registered on Canara Bank's complaint alleging that it sanctioned credit limits and loans to Jet Airways (India) Ltd to the tune of Rs 848.86 crore, of which Rs 538.62 crore were outstanding. JIL diverted funds to its subsidiaries or misused them, it alleged.
As per the probe agency, a consortium of banks including the public sector major State Bank of India has an overall outstanding exposure of Rs 6,000 crore to JIL. Canara Bank's JIL loan account with outstanding dues of Rs 538.62 crore turned into NPA in 2019. This NPA was nothing but the "proceeds of crime" which were diverted and siphoned off, the ED claimed.
The probe agency, represented by special public prosecutor Sunil Gonsalves, claimed that the funds were also siphoned off in the garb of professional and consultancy fees paid to various persons/entities. An audit report of Ernst & Young(EY) showed that Rs 9.46 crore were paid to Naresh Goyal's family members -- his wife Anita Goyal, daughter Namrata Goyal and son Nivaan Goyal from the accounts of JIL for various purposes between 2011-12 to 2018-19, the ED said.
These transactions had no rationale and were carried out with the “ulterior motive” of diverting company funds for “personal gains and enrichment”, it said. Citing the audit report, the ED said it appeared that salaries and operational expenses of Flimstoc Private Ltd, a production house owned by Goyal's daughter, were "potentially borne" by JIL.
Certain emails indicated that salary expenses of staff at Naresh Goyal's Mumbai and Delhi residences were also "potentially borne" by the company, it said. Payments also seemed to have been made from the company's accounts for "certain movable assets in the nature of furniture accessories, apparel and jewellery" purchased by Naresh Goyal and his wife, the ED told the court.
JIL also diverted funds by making advances of Rs 2,547.83 crore to Jet Lite Limited (JLL), a subsidiary, and subsequently writing them off, the ED told the court. JIL also paid Rs 403.27 crore for things not in conformity with the object of borrowing the funds, it said.
Further, Goyal transferred funds to various companies and trusts created by him and based in tax haven countries, and acquired properties in foreign countries including Dubai and the UK, it added. He was “evasive in his replies” and did not provide information about the purpose of obtaining loans and their utilisation, the ED said, seeking his custody for 14 days.
Defence lawyers Abad Ponda and Amit Naik contended that the high court had stayed the probe in the proceedings initiated on the complaints of a consortium of banks. The forensic report on the basis of which the case was being probed was never shared with Goyal, but it was discussed at a joint lenders' meeting on May 8, 2020, they said.
Naik contended that it was stated in this meeting that there was no conclusive evidence of fraud. The court, after hearing both the sides, remanded Goyal in the custody ED till September 11.
