Goyal couple’s exit paves way for an infusion of funds worth Rs 1,500 crore by lenders, most of which are state-run banks.
In the wonder that is India, supposedly the world’s largest democracy, all are equal but some are more equal than others. The outgoing chairman of Jet Airways, Naresh Goyal, is clearly a more equal. That makes his exit unusual.
It was extremely difficult anyway, for he was unwilling to quit. It needed the guile and weight of State Bank of India (SBI) chairman Rajnish Kumar to convince Goyal that he had to go. Jet owes around Rs 8,000 crore to lenders who are led by SBI. The chief of the country’s largest bank, and that too government-owned, had to exert himself to edge out Goyal and his wife Anita Goyal from the board of the airline.
Such is the clout of Goyal. For over a quarter of a century, he ruled the Indian skies; what was convenient to him was usually government policy; what he didn’t like—Air India privatisation, for instance—didn’t happen. Governments came and went; the power and influence of parties and leaders waxed and waned, but not Goyal’s. Allegations were made against him; powerful people tried to expose him; the Intelligence Bureau made adverse remarks against him. But nothing happened to him, or to his airline. That is, till recently.
The Goyal couple’s exit paves the path for an immediate infusion of funds worth Rs 1,500 crore under a resolution plan authored by the lenders, most of which are state-run banks. In fact, the exit of the Goyal couple has been rightly called Jet’s backdoor nationalisation.
“My expectation [for Jet sale] is 31st May… Market is open for everyone whosoever wants to come in. There will be expression of interest which will be given by 9 April and binding bid by 30 April,” SBI’s Kumar told a news channel. “It could be financial investor, it could be airline… including Naresh Goyal himself or Etihad. Nobody is barred from bidding or taking over the airline as per the rule.” So, for all you know, Goyal may be back.
Notice that there is no criminal or civil inquiry against Goyal; for much less, businesspersons have faced the ire of the Enforcement Directorate, the Central Bureau of Investigation, the Serious Fraud Investigation Office, etc. In his A Feast of Vultures: The Hidden Business of Democracy in India (Harper Collins, 2016), investigative journalist Josy Joseph mentions a letter Intelligence Bureau joint director Anjan Ghosh wrote. “It was a single-page note to Sangita Gairola, joint secretary at the Union ministry of home affairs (MHA), saying that his agency had ‘confirmed information of intermittent contacts between (airline executives) and underworld dons, Chhota Shakeel and Dawood Ibrahim, to settle financial issues. There is strong suspicion that part of investments may have accrued through the help of underworld groups, prominently headed by Dawood and Chhota Shakeel’.”
Former IB chief K.P. Singh also wrote in a letter that Goyal “appeared to have earned his wealth through means meriting investigation for FERA [Foreign Exchange Regulation Act] violations.”
It was not just the security agencies that were gunning for Goyal; in 2000, the then disinvestment minister Arun Shourie had openly accused him of having scuttled the privatisation of Air India. Questions were raised about the funding of Jet Airways. But nothing happened to Goyal; his business thrived unabated; he went international when the Congress-led United Progressive Alliance was in office. Foreign countries were concerned about Jet; their concerns were brushed aside by the Indian government.
What after Goyal? SBI may be confident about selling it off within a couple of months, but there are no buyers. The Tatas were interested some time ago, but they don’t seem keen any longer. Business Standard reported on 28 March, “The board of directors of Tata Sons, the holding company of the group, is learnt to have decided soon after that there should be no dialogue with Jet for any strategic deal without full diligence including a forensic audit. The talks between the sides never resumed, another source said, while citing ‘legacy issues’ and the ‘origin of Jet funding’ as the problem areas that are tough to address.” The evil that men do…
So, who’ll be the saviour? The taxpayer, of course. He has been financing the revenue-guzzling Air India for years; now he will have to carry another “national carrier”.
By the way, these are not the only burdens he has to shoulder. There is a cash guzzler called Infrastructure Leasing & Financial Services Limited (IL&FS). For about three decades, it was run by private individuals but public money. Suddenly, a few months ago, we were told that it was saddled with debt in the region of Rs 90,000 crore. The solution? Breaching all norms and propriety, it was taken over by the taxpayer-funded LIC.
The taxpayer will soon have another cross to bear.
Ravi Shanker Kapoor is Editor, Power Corridors