Jet Airways Founder Naresh Goyal Arrested by ED for Bank Fraud and Money Laundering

ED arrests Jet Airways founder Naresh Goyal in bank fraud linked money laundering case


In a major development, the Enforcement Directorate (ED) arrested Jet Airways founder Naresh Goyal on Friday night in connection with a money laundering case related to an alleged bank fraud of Rs 538 crore at Canara Bank. Goyal, 74, was taken into custody under the Prevention of Money Laundering Act (PMLA) after being questioned for several hours at the ED office in Mumbai. He is expected to be produced before a special PMLA court on Saturday where the ED will seek his custodial remand.

The money laundering case stems from an FIR filed by the Central Bureau of Investigation (CBI) in May this year against Jet Airways, Goyal, his wife Anita and some former company executives for allegedly cheating Canara Bank of Rs 848.86 crore, of which Rs 538.62 crore is outstanding. The bank had declared the account as "fraud" on July 29, 2021.

The CBI had alleged that Jet Airways had siphoned off funds from the loans availed from the bank for various purposes such as landing, navigation and utilisation of services at airports, security deposits for lease rentals of aircraft, payment of variable rentals, business promotion, introduction of new routes and turnaround plan. The bank had conducted a forensic audit of Jet Airways' transactions and documentations between April 1, 2011 and June 19, 2019, which revealed diversion and siphoning of funds by the airline.

The audit report identified three key modus operandi for siphoning of funds by Jet Airways: through commission expenses, through its investment in subsidiary company Jet Lite (India) Ltd, and through making professional consultancy expenses. The report also showed that personal expenses of the Goyal family such as salaries of staff, phone bills and vehicle expenses were paid by Jet Airways.

The ED had searched around eight premises in Mumbai and Delhi, including auditor Rajesh Chaturvedi, in July this year as part of its investigation under the PMLA. The agency had also summoned Goyal and his wife for questioning several times but they had failed to appear. The ED had also issued a lookout circular against them to prevent them from leaving the country.

Jet Airways was once India's largest private airline but it collapsed in April 2019 due to mounting debts and losses. The airline is currently undergoing a resolution process under the Insolvency and Bankruptcy Code (IBC). A consortium of Kalrock Capital and Murari Lal Jalan has been approved as the successful bidder for the revival of Jet Airways by the National Company Law Tribunal (NCLT).

Source: 

(1) Jet Airways founder Naresh Goyal arrested by ED in bank fraud-linked money laundering case. https://www.moneycontrol.com/news/business/jet-airways-founder-naresh-goyal-arrested-by-ed-in-money-laundering-case-11297731.html.
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