Jet Airways audit shows diversion of funds, excess fuel billing
MUMBAI, July 15: A State Bank of India commissioned forensic audit of Jet Airways books has revealed misappropriation of funds relating to provision of loans and fraudulent billing for JP Miles, according to two people with direct knowledge of the matter.
The report also highlights that invoices raised were not verified leading to excess billing and fuel expenses were raised substantially for Jet even when they remained static for other airlines.
"Provision has been made for Rs 3,353-crore loan given to Jet Lite over four years. Board resolution, shareholder approval for making the provision was not made available to the auditors," the forensic audit conducted by EY says. ET has seen a copy of the report.
"Loans were given to Jet Lite despite Jet Airways recording losses in fiscal year 2015 and declining profit over the years," the report added.
The government had recently ordered a probe into Jet Airways for alleged siphoning off funds and for financial irregularities.
The MCA ordered the SFIO probe under Section 212 (1) C of the Companies Act, based on its inspection report. The report indicated "prima facie" that the company was involved in "malpractices, mismanagement through siphoning off funds… preferential and related party transactions, prejudicial to public interest."
The forensic audit also says that invoices raised on Jet Privilege were not verified, resulting in excess billing of nearly 1crore during July-September 2015.
Monthly invoice of Rs 15 crore was accounted for by Jet Airways for commercial activities without relevant documents supporting them. The report also says that the company was billed Rs 140 crore fraudulent JP miles leading to a loss of Rs 46 crore. Multiple other discrepancies were noted in the miles accrued versus what the company reported.
"There has been a systematic effort to siphon money from the company. In the limited analysis conducted it is clear that multiple methods were used to take out funds from Jet Airways," said a person aware of the development.
SBI did not respond to an ET query. An official spokesperson for EY India said, "We are bound by our client confidentiality obligations and are unable to comment." -ET Bureau