The Janata Party president has urged Prime Minister Singh to put on hold both the India-UAE 'bilateral' and the Jet-Etihad proposed deal until a thorough independent investigation

Janata Party president Dr Subramanian Swamy has raised several questions on the ownership and effective control of Jet Airways post its deal with Abu Dhabi-based Etihad Airlines and on the security concerns related with the deal. In a letter sent to Prime Minister Manmohan Singh, the Janata Party president had requested to adequately scrutinize the proposal between Jet and Etihad before granting the approval.

He said, "All scrutiny and investigation in the past have for one vested reason or another, been suppressed and never acted upon putting Indian security gravely at risk. The allegations of serious underworld connections from the united Arab Emirates (UAE) continue to haunt Jet's ownership and need to be pre-examined by the Intelligence Bureau (IB), Department of Revenue Intelligence (DRI) and other Intelligence services."

According to Dr Swamy, the process of examining the ownership and effective control, Government needs to first verify the Indian ownership and control, which is supposedly in the hands of a non-resident Indian (NRI), Naresh Goyal.

"It is essential to examine the ownership of Tail Winds Ltd, registered in Isle of Man, a tax haven, as to who the true shareholders and beneficial owners are, prior to and as a consequence of the proposed transaction. This would be important to establish and ensure that it is a genuine and NRI owned company and has no other shareholders. In addition, it should also be proved that it has not been financed from inappropriate and unacceptable sources," Dr Swamy said.

Dr Swamy said, the matter relating to security has been of serious concern to many of us and requires more serious investigation. "In December 2001, Anjan Ghosh, the then joint director of IB, wrote to the Ministry of Home Affairs confirming information about Naresh Goyal's underworld links with Chhota Shakeel and Dawood Ebrahim and also that the funding of Jet Air was with 'tainted Indian money laundered and recycled'. This document had been already submitted in the Bombay High Court. It has since not be overruled or contradicted."

"Under these circumstances, it is essential that a complete investigation be done on the ownership and antecedents of Jet and Jet Air from the year 1993 onwards, till the date of the transaction, including the effective control post the transaction. This investigation should be done by a special investigation team (SIT) of the Central Bureau of Investigation (CBI), the DRI and IB and other appropriate agencies. The information should also be sought under the Tax Information Exchange Agreement with the Isle of Man on the company," Dr Swamy said.

According to the Janata Party president, unless the real owners of Jet Air are established-from inception and more specifically, over the years, it would be a national security threat and risk for India to proceed with a transaction. Sn airline operating in India but being managed from outside, that too with unknown ownership and interest, will prove to the dangerous. 

He said, "A great deal of material is available to support that prima facie, monies have been circulated through the company over the years by various methods including by the appointment of GSA's both in India and abroad, in companies such as Jet Air Pvt Ltd, owned by Naresh Goyal."

"In contrast, it has never been established as to who the real owners of Tail Winds are and how they are funded. It is alleged that the funds received now from Etihad have been syphoned out from Jet Airways for the purpose of reorganizing and restructuring the shareholding of Tail Winds to enable Naresh Goyal to show himself as the 51% owner as an NRI.  In order to do this he needs to repay the original financers or circulate the funds in such a way that the shares get transferred from Tail Winds to his personal name," he added.

The Janata Party president also raised questions over the valuation of Jet Airways by Etihad. He said, "…the government should go into the details as to why the value of Jet, which is valued by the stock market at around $ 614 million (as on 9th July 2013), is being considered differently by Etihad at about $1,582 million. Is it considering the direct and indirect benefits inuring to Jet through sale of UK slots, sale of privilege memberships, and direct investment in Jet of $375 million?"

"In addition Jet Air has been given a soft loan of $ 300 million. This clearly shows that the entire valuation of Jet is not based on the intrinsic worth of the company but on the value of India's bilateral Rights which are now being given to Abu Dhabi, to benefit their national airline and Naresh Goyal," Dr Swamy alleged.  

Talking about sensitivity of the deal in terms of national security, Dr Swamy said there are key concerns relating to operations of foreign controlled airlines on our defence airports and the operations of these airlines in times of national emergency.

He said, "You (the PM) will appreciate it not without reason, that the mature aviation jurisdictions like US and Europe give lot of emphasis in their laws and regulations on ownership and control of airlines registered in their jurisdiction. In this background, I am also dismayed to learn from reliable sources that rather than addressing the national security issues, Government is considering enhancement of FDI, including that of foreign airline, to 74% and simultaneously amending the civil aviation law to remove the ownership and control requirements."

"In fact, as I have been informed, the committee constituted for the purpose of FDI liberalization does not find aviation to be a sensitive issue in the context of our national security.  I earnestly appeal to you to please consult the Ministry of Defence and other security and intelligence agencies and also aviation stake holders like the airlines and airports before considering such far reaching policy change," Dr Swamy said.

He said, even the most developed economies like the US and European Union (EU) have clear restrictions on ownership and effective control in order to safeguard their national security and interest. In the case of the US, it is 25% with voting rights and 24% with non-voting. In the case of the EU, it is 49%.  Even the bilateral agreements between countries provide that the bilateral rights can only be utilised by airlines where the effective ownership and control rests with nationals in their respective countries, the Janata Party president added. 

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