Naresh Goyal, the founder of Jet Airways, was arrested by the Enforcement Directorate (ED) on Friday night in an alleged ₹ 538-crore money laundering case linked to loans and credit lines given to the airline by Canara Bank. He is currently in judicial custody and lodged at Arthur Road Jail in Mumbai
On Saturday, he appeared before a special PMLA court and pleaded with "folded hands" that he had "lost every hope of life" amid the alleged fraud case. He said he misses his wife Anita very badly and said she is in the advanced stage of cancer. He also mentioned his daughter's illness as a reason for his despair. He said he would rather die in jail than be alive in his current situation
The court extended his judicial custody till January 13, 2024, and asked the ED to file a reply on his bail plea by January 10, 2024. The court also directed the jail authorities to provide him with medical assistance and allow him to meet his wife and daughter
Jet Airways, once India's largest private carrier, suspended operations in April 2019 because of a severe cash crunch and mounting debt. The airline was acquired by a partnership between UAE-based businessman Murari Lal Jalan and London-based Kalrock Capital in June 2021, after a protracted insolvency process
Canara Bank is the complainant in this case, as it alleged that Jet Airways, Naresh Goyal, and others committed a fraud of Rs 538 crore by diverting funds to its subsidiaries and defaulting on loans and credit lines given by the bank. The bank filed a complaint with the CBI, which registered an FIR against the accused on May 3, 2023. Based on the CBI's FIR, the ED initiated a money laundering probe against Goyal and others, and arrested him on September 1, 2023. The ED claims that Goyal diverted Rs 9.46 crore from Canara Bank to pay his personal loans. The case is still under investigation by both the agencies.
According to the Prevention of Money Laundering Act, 2002 (PMLA), a person guilty of money laundering is punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine. The punishment may vary depending on the nature and gravity of the offence, the amount involved, and the prior criminal record of the accused. The PMLA also empowers the Enforcement Directorate (ED) to attach and confiscate the proceeds of crime and the property involved in money laundering.
There have been several cases of financial fraud in India that have rocked the banking sector and the public trust. Here are some of the most notable ones:
- **Nirav Modi-Punjab National Bank (PNB) fraud**:
This is one of the largest banking scandals in India's history, involving diamond merchants Nirav Modi and his uncle Mehul Choksi. They defrauded PNB of approximately $2 billion through a complex web of unauthorized transactions using Letters of Undertaking (LoUs). The fraud went undetected for years due to a lack of integration between the bank's SWIFT system and its core banking system (CBS)
- **PMC Bank crisis**:
This is a case of alleged mismanagement and fraud by the directors and promoters of Punjab and Maharashtra Co-operative (PMC) Bank and Housing Development and Infrastructure Ltd (HDIL). The bank allegedly created fictitious accounts to hide its exposure to HDIL, which defaulted on its loans. The bank's total exposure to HDIL was over 73% of its total assets, violating the RBI's norms. The RBI imposed restrictions on the bank's operations, affecting its depositors and shareholders
- **IL&FS default**:
This is a case of corporate governance failure and financial mismanagement by Infrastructure Leasing & Financial Services (IL&FS), a non-banking financial company (NBFC) that provides infrastructure financing and development. The company defaulted on its debt obligations, triggering a liquidity crisis in the NBFC sector and the capital markets. The government intervened and replaced the board of IL&FS with a new one, which initiated a resolution process to recover the dues and sell the assets of the company.
These are some of the recent examples of financial fraud in India that have shaken the confidence of the investors, regulators, and the public. The government and the RBI have taken various measures to prevent and detect such frauds, such as enhancing the oversight, reporting, and corporate governance mechanisms, and strengthening the legal and regulatory framework. However, there is still a need for more vigilance, transparency, and accountability in the financial sector to safeguard the interests of the stakeholders and the economy.