TATA’S hope AirAsia probe will show how rules hobbled aviation industry

Published by Paresh Baidya on June 25, 2018June 25, 2018

“TATA’S hope AirAsia” – Tata Sons said it hopes the inquiries currently underway into AirAsia India’s lobbying efforts a few years ago will show how the rules were constraining the aviation industry’s growth and that the airline was legitimately seeking to persuade officials to reconsider them.

“We hope that the investigations will bring out the real issues which were impacting the growth of the aviation sector and AirAsia India’s sincere efforts to urge the authorities to relook at the same,” a spokesperson said in an email response to ET’s queries.

Tata Sons and AirAsia Bhd hold 49% each of the carrier. The board had taken note of the concerns flagged over AirAsia flouting corporate governance guidelines raised at multiple meetings, said two senior executives close to the development. Some Tata group executives told ET that more action needed to be taken by the holding company’s board over the corruption and lobbying charges.

“These are always uncomfortable issues but that’s exactly why boards have been constructed to deal with,” one said. Tata Sons said the issues related to governance have been discussed at the board level in the past. “It had resulted in the institution of a formal inquiry on some financial misappropriation by Deloitte India in 2016,” the spokesperson said.

Basis the findings of this report, AirAsia has filed a criminal complaint in Bengaluru against the former CEO (subsequently converted into an FIR by the Bangalore Police) and also initiated civil proceedings. R Venkataramanan as a nominee director of Tata Sons fully supported the foregoing.”
The Central Bureau of Investigation (CBI) recently booked AirAsia boss Tony Fernandes and AirAsia India director and Tata Trusts’ managing trustee Venkatramanan for allegedly trying to manipulate government policies through corrupt means to get an international license for its Indian venture.

Venkataramanan is also an executive on all Tata trusts. This relates to changes it was seeking in the so-called 5/20 rule and violations of Foreign Investment Promotion Board rules.

Under 5/20, an airline could only fly overseas if it had been operational for five years and had 20 planes. The five-year norm was scrapped in June 2016.