Flagging "ethical concerns" in Tata group's aviation joint venture with AirAsia, ousted Chairman Cyrus Mistry has alleged that forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent entities in India and Singapore.
As the bitter war played out between him and interim Chairman Ratan Tata, Mistry also alleged that due to the latter's passion for aviation, Tata Sons board increased capital infusion in the aviation sector at multiple levels of the initial commitment.
In a letter written to the Board members of Tata Sons a day after he was ousted, Mistry said: "Board members and trustees are also aware that in the case of AirAsia, ethical concerns have been raised with respect to certain transactions as well as overall prevailing culture within the organisation.
"A recent forensic investigation revealed fraudulent transactions of Rs 22 crore involving non-existent parties in India and Singapore."
Mistry went on to allege that "executive trustee Mr Venkataraman, who is on the board of AirAsia and also a shareholder in the company, considered these transactions as non-material and did not encourage further study".
It was only at the insistence of the independent directors, one of whom immediately submitted his resignation, that the board decided to belatedly file a first information reports, Mistry said in the letter.
He claimed it was Tata who completed negotiations with AirAsia but early in his tenure as the Chairman of Tata Sons he was asked to table a proposal for the JV with AirAsia at a Tata Sons board meeting.
Claiming that in the case of JV with AirAsia, he was able to extract a "promise of no debt to be raised at the level of JV, as well as limiting Tata Sons investment to 30 per cent of the USD 30 million equity", Mistry said he was taken by surprise with a similar situation when Tatas formed a JV with Singapore Airlines.
"A few months later, I was surprised to be confronted with a similar situation requiring me to execute a fait accompli JV with Singapore Airlines," he said.
Mistry further said in the letter, "without the benefit of time and experience to fully evaluate the proposal, I had to accept that Tata Sons would take a 51 per cent stake in a USD 100 million joint venture".
Pointing fingers at Tata, he said: "The passion for the airlines sector has led Mr Tata to continue his involvement with strategy of the two airlines. It is on his advice that the Tata Sons board has increased the capital infusion in the sector at multiple levels of the initial commitment."
In 2013, Tata Sons had joined hands with Malaysian carrier AirAsia and Arun Bhatia's Telestra Tradeplace to start low cost carrier AirAsia India. The carrier had to wait for nine months before taking off.
In September 2013, Tata group had joined hands with Singapore Airlines to start a new full-service airline in India, 18 years after a failed attempt. Tata Sons owned 51 per cent stake in the carrier, which has been christened as Vistara with Singapore Airlines holding the rest.