July 15, 2019

Audit Of Jet Airways Reveals Diversion Of Funds, Fraudulent Billing, Excess Billing, Substantially Inflated Fuel Expenses

[ By Bobby Anthony ]

Jet Airways

A forensic audit of Jet Airways has revealed alleged misappropriation of funds relating to provision of loans as well as fraudulent billing for JP Miles.

The State Bank of India (SBI) commissioned audit has also revealed that unverified invoices led to excess billing, while fuel expenses were raised substantially for Jet, even when such expenses were found to be static for other airlines.

The audit has revealed that provision was made for a Rs 3,353-crore loan to Jet Lite over four years, though the board resolution or shareholder approval for making such a provision was not made available to auditors.

As per the audit report, loans were given to Jet Lite despite Jet Airways recording losses in fiscal year 2015 and declining profit over the years.

Earlier, the Ministry of Company Affairs had recently ordered the Serious Fraud Investigation Office (SFIO) to probe the grounded airline company, under Section 212 (1) C of the Companies Act, based on its inspection report.

The report had indicated “prima facie” that the company was allegedly involved in “malpractices, mismanagement through siphoning off funds… preferential and related party transactions, prejudicial to public interest.”

The recent SBI commissioned forensic audit also stated that that invoices raised on Jet Privilege were not verified, resulting in excess billing of nearly Rs 1 crore during July-September 2015.

Similarly, monthly invoices worth Rs 15 crore were accounted for by Jet Airways as “commercial activities” despite lack of relevant documents to support these claims.

The audit report also stated that the company was billed Rs 140 crore for fraudulent JP miles leading to a loss of Rs 46 crore, besides several other discrepancies.

There are indications of a systematic effort to siphon off money from the company, the audit has revealed.

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