Last week, CNBCTV18.com reported that AirAsia India engaged Singapore-registered HNR Trading PTE Ltd to assist with lobbying to relax aviation rules. HNR Trading is at the heart of an enquiry by the Central Bureau of Investigation (CBI) into alleged bribes to government officials.

Now an examination of company records, legal documents and email correspondence as well as interviews with three people deeply familiar with the matter has revealed that it was Tony Fernandes, chief of Malaysia’s AirAsia group, who instructed former AirAsia India CEO Mittu Chandilya to recruit HNR.

The documents and interviews contradict the findings of an audit by Deloitte Touche in 2016 that said Chandilya instructed company payments to HNR. AirAsia India launched a case against Chandilya soon after Deloitte shared its report with the airline’s board.

CBI has accused AirAsia India, its Malaysian parent AirAsia Bhd, HNR, and senior executives, including Fernandes, and unnamed government officials, among others, for allegedly bribing government officials to secure permission to fly abroad. AirAsia India, a joint venture between the Tata Group and AirAsia Bhd, used HNR as a proxy to route bribes totalling Rs 12.28 crore to officials, according to CBI.

CBI has not named Chandilya in its First Information Report (FIR) released on May 29. But the agency has accused Fernandes and Bo Lingam, his confidant and a director of Air Asia India, of pressurising Chandilya to pursue the matter of changing aviation rules.

AirAsia India has denied it did anything wrong.

Fernandes and AirAsia India did not comment for this article. Chandilya, who is now CEO of Adani Logistics, also did not comment.

Instructions To Chandilya

In a letter dated March 31, 2015, Fernandes authorised Chandilya to sign up HNR Trading to act as an agent to assist in the airline’s “regulatory and corporate affairs liaising”, a euphemism for lobbying. Fernandes informed Chandilya that he has been authorised by the board to negotiate “the terms and conditions of agreements such as this” and execute the agreement.

Chandilya underscores this instruction in a mail sent to Fernandes and AirAsia India chairman S Ramadorai on November 2, 2016. He said the decision to appoint regulatory agencies abroad was “explicitly sanctioned” by Fernandes and the signed sanction letter is with the company and finance team. “I have copy of the same,” he wrote.

Ramdorai did not comment for this article.

Chandilya quit AirAsia India in April 2016 after declining to renew his three-year contract as CEO.

In the email exchange, Chandilya also refers to the enquiry (by investigating agencies) regarding local partners and agencies used for lobbying with bureaucrats and ministers. Chandilya wrote that “the particular partner (in Mumbai and New Delhi) was directed to be used by yourself (AirAsia) and correspondences between them, yourself and myself as well as other aspects” are noted in the logs of meetings. “There are some recordings which were made only for me should I need to present in the future.”

Chandilya does not reveal the name of the “particular partner”.

Fernandes’ instructions to Chandilya to hire HNR came 10 days after the AirAsia India board met in Hyderabad to discuss regulatory updates with regard to eligibility to fly abroad, among other matters. “Various options and scenarios to meet the eligibility criteria were presented and discussed at length,” noted the board resolution.

CNBCTV18.com had laid down details about the board meeting and events that led to the engagement of HNR, a logistics provider, in a report published on May 30.

Deloitte did not comment if it was aware of the letter by Fernandes and whether it contacted Chandilya or other employees whom it has accused of wrongdoing. “We are bound by confidentiality obligations and are unable to comment on client specific matters,” said a spokeswoman for Deloitte.

A senior executive with a rival auditing firm said a company might withhold information, but a forensic auditor usually states that the findings were based on what was shared. “The auditor states the limitations in this regard,” said this executive, a senior partner in the firm who spoke on the condition that his name and that of his company are not revealed.

The auditor said an audit is a report of facts. “An auditor before submitting the findings, corroborates all facts, including contacting the people the investigation implicates,” he said.

Question of Personal Expenses

Deloitte also accused Chandilya of using company money for personal expenses. In the email and in an affidavit to be filed at a Bangalore court seeking the dismissal of the AirAsia lawsuit, Chandilya said the expenses carried approvals.

“We are aware that such expenses were with the approvals and were submitted in the processes layout in the company which is evidenced by the expenses reports, board authorisation and the email approvals. I have the copies of these documents where explicit approvals are granted,” he wrote.

The alleged links to HNR have dogged AirAsia India since October 2016, when Cyrus Mistry after his ouster as chairman of Tata Sons, the group’s holding company, accused the airline of financial wrongdoing and corporate governance violations, including at AirAsia India.

It was Mistry who highlighted “fraudulent transactions and ethical concerns” revealed by a forensic investigation, in a letter he wrote to the directors of Tata Sons.

HNR is co-founded by Rajendra Dubey, the former head of Globe Air Cargo India, a cargo agent that AirAsia India' hired between July 2014 and November 2016. The CBI has summoned Fernandes and Dubey, who is also named in the FIR, to appear before its officials on June 6.

Tata Sons and AirAsia Bhd of Malaysia own 49% each in AirAsia India. AirAsia India chairman S Ramadorai and director R Venkataramanan own the remaining 2%.

In June, the government relaxed the rules for airlines to fly international under a new aviation policy.

For the complete coverage on AirAsia, click here

First Published:Jun 4, 2018 11:14 AM IST