HYDERABAD: In a setback to troubled Jet Airways India Ltd, details emerged that Ernst & Young (EY) India, which conducted a forensic audit of the airline’s financials, also raised ‘red flags’, but it’s unclear if the contents of the report were shared with prospective bidders. “Forensic audit has been completed. Of course, there are red flags and one cannot rule out financial irregularities,” a senior banker told TNIE, adding that the report won’t be put out in public domain.
“But we will give it to law enforcement authorities if we are asked to do so, or if we have any suspicions about fraudulent activity,” he said.
Questions sent to EY India, Jet Airways and SBI Caps, the trustee overseeing the ongoing bidding process, did not elicit any response. Jet Airways, in a disclosure to the bourses last year, had noted that it was “fully cooperating with the auditors and providing them all the information, as is being sought in this connection.”
It may be noted that the SBI-led lenders’ consortium roped in EY India to conduct a forensic audit of the airline’s financials between fiscals 2014 and 2018. However, according to sources, since the audit was initiated by lenders, it is their discretion whether to divulge its contents with prospective bidders. “Any audit conducted at the request of the lenders becomes the property of the lenders and it’s for their perspective. They need not divulge this information for other parties and interested bidders have to carry their own audit perspective,” a source said, adding, “Whatever the company (Jet) owns, was put in the data room to be accessed by qualified bidders.” According to him, “not everything was put in the data room” though bidders were provided clarifications from time to time.
As per news reports, the Ministry of Corporate Affairs may refer Jet to Serious Fund Investigation Office for fund diversion, to probe the reasons why it had written off investments in various subsidiaries. Meanwhile, sources also hinted that the outcome of the EY report, though not a “full-fledged forensic audit per se”, compelled lenders to back off from extending a lifeline to the carrier in March.