SWAMY SLAMS ‘FRAUD' JET-ETIHAD TIE-UP
Thursday, 30 May 2013 | PNS | New Delhi
Janata Party president Subramanian Swamy on Wednesday termed the Jet-Etihad deal and related memoranda of understanding (MoUs) between India and UAE as a "mega fraud" in the making, and urged Prime Minister Manmohan Singh to order a review of these two agreements.
In a letter to PM, Swamy said this deal would lead to collapse of national carrier Air India. "The Jet Airways-Etihad deal has two components - one of enabling Etihad to become entitled, by an MoU executed on April 24 by the Governments of India and UAE on bilateral air services, to vastly enhance Etihad's air traffic, measured by seat capacity, between the two countries," he said..
"This arbitrarily determined entitlement, tantamount to free provision of India's sovereign airspace to a foreign airline and hence fraught with serious national security issues, is patently for sweetening the private purchase of Jet Airway's substantial equity by Etihad," said Swamy.
He alleged that Finance Minister P Chidambaram "misquoted" the Prime Minister in all minutes in connection with approval of these deals, claiming that the deals were desired by Singh.
Swamy alleged that the deal with Etihad was to pacify the Sheiks of Abu Dhabi, who also has control over Etisalat, which lost telecom licences due to the 2G scam exposé.
"What is distressing is that the minutes signed by Finance Minister Mr P Chidambaram, dated April 22, reveal that this rocket speed clearance of the deal is on your direction," he said the Janata Party chief, announcing his decision to approach Supreme Court soon if no action was taken by PM.
Swamy said the Parliamentary Standing Committee headed by Sitaram Yechury had already opposed the deal. The committee has also recommended penalisation of Jet Airways for clandestinely selling its London route entitlement to Etihad even before the deal was sealed, and without informing the Government of India, he said, urging the PM for a comprehensive review.
Sebi writes to Jet Airways, raising objections over parts of its agreement with Etihad
MUMBAI: The Securities and Exchange Board of India (Sebi) has written to Jet Airways, raising questions over parts of the agreement signed by the Indian carrier with Etihad Airways last month as they appear to confer substantial management rights to the Middle-Eastern airline. Sebi's concerns might lead to a reworking of the over Rs 2,000-crore deal to secure regulatory approval.
In a recent communication to Jet Airways, the regulator expressed reservations regarding the shareholders' agreement entered into by the two partners that gives Etihad the right to nominate three directors on the board of the Indian carrier and to decide senior management positions. The letter, sent earlier this month, was described to ET by people familiar with its content. The essential point of the letter is that Jet Airways has to convince the regulator that Etihad's rights do not amount to joint control alongside promoter Naresh Goyal.
Shortly after announcing the strategic alliance with the Abu Dhabi-based airline on April 24, Jet Airways had said there would not be any change in control. A statement issued by the company said Goyal would continue to hold a 51% stake in the company.
A person with direct knowledge of the developments said Sebi will vet key documents, including the shareholders' agreement, to ascertain if there are clauses or provisions that indicate the acquirer or the foreign partner is in a position to influence or control key management policies or operations. The person declined to be named given the sensitivity of the case.
If the regulator is not satisfied with Jet's response, it can even direct the company to rework certain provisions of the shareholders' agreement with Etihad to ensure it conforms to both the letter and spirit of the regulations.
Jet did not respond to requests on email or phone calls seeking comments on these issues.
http://articles.economictimes.indiatimes.com/2013-05-23/news/39475499_1_etihad-airways-jet-airways-sebi-normsCompetition Commission looking into Jet-Etihad deal
NEW DELHI: Fair trade regulator Competition Commission is examining the over Rs 2,000-crore deal between leading carrier Jet Airways and Abu Dhabi-based Etihad Airways.
The Competition Commission of India (CCI) has received an application seeking approval for the proposed Jet-Etihad transaction.
"We are looking into the deal," a senior CCI official said.
Forging a strategic alliance, Jet Airways has decided to sell 24 per cent stake to Etihad Airways for about Rs 2,058 crore. The deal would mark the first investment by a foreign carrier in an Indian airline since the change in FDI policy.
Most of the merger and acquisition deals require approval from the Commission, which keeps a tab on anti-competitive practices in the market place.
Under the proposed deal, Jet Airways would offload sell 27.26 million shares in a preferential offer to Etihad at Rs 754.74 a piece.
"The value of this equity investment is USD 379 million (about Rs 2,058 crore) and will result in Etihad Airways holding 24 per cent of the enlarged share capital of Jet Airways," the two airlines had said in April.
The alliance is also expected to bring additional traffic, frequencies and revenues to metro airports, as well as several non-metro airports of the Airports Authority of India
http://articles.economictimes.indiatimes.com/2013-05-22/news/39445668_1_jet-airways-etihad-airways-jet-etihad-deal'Governance issues with Jet Airways, Etihad Airways deal structure'
The deal structure between Jet Airways and Etihad Airways has once again come under criticism from proxy advisory firms with Stakeholders Empowerment Services (SES) saying that the Indian aviation major's proposed amendments to the articles of association suffer from a lot of governance issues.
According to SES, some of the proposed changes would give special privilege rights to Etihad and also lead to a scenario wherein all shareholders would not get equitable rights. The advisory firm has asked shareholders to vote against the resolution at the EGM scheduled on May 24.
“The company is adopting a new set of articles of association, but has not identified the changes made in the articles. This makes the disclosure totally ineffective unless a shareholder compares previous set of articles and proposed articles line by line. Therefore, SES believes that the disclosures made by the company are not transparent,” says the report. In April, Jet approved a decision to allot 2.73 crore shares on a preferential basis to Etihad for around Rs 2,060 crore. After the allotment, Etihad will hold 24% stake in Jet, while promoters will have 60.80% stake. The deal values Jet at nearly Rs 8,500 crore.
SES, which is headed by JN Gupta a former executive director of Sebi, says that the proposed amendments restrict the rights of the promoters to sell/ transfer shares without the written consent from Etihad. “Although this does not affect rights of other shareholder, it reflects additional rights to Etihad,” it says.
In another instance, according to SES, Etihad is being provided special privilege (not provided to other shareholders) to gain access to company records and resources to carry out due diligence review in case it decides to transfer its shares.
“SES believes that each shareholder should get similar rights irrespective of its shareholding in the company. Further, a particular shareholder (or class of shareholder) should not get access to information which is not available to other shareholders,” states the report. SES has further stated that one of the amendments that provides that a general body meeting would not meet the quorum requirements unless at least one representative of the promoter and investor is present also appears to be violating the Companies Act.
This is not the first time that SES has raised its objections to the Jet-Etihad deal. Earlier, it had said that Etihad cannot be treated as a public shareholder and has to be treated as Person Acting in Concert (PAC) with the current promoter and an open offer is a must in the deal. SES had based its analysis on the fact that the press release regarding the deal mentioned that current promoters would hold only 51% post an offer for sale to comply with minimum public shareholding norms, which will also see Etihad's stake at 24%.
http://www.financialexpress.com/news/governance-issues-with-jet-airways-etihad-airways-deal-structure/1115745
FE BUREAU: MUMBAI, MAY 15 2013, 01:43 IST
I write this letter on the subject of another developing mega fraud that also impinges on India’s national security. This fraud is the so-called Jet Airways-Etihad deal, that has two components—one of enabling Etihad to become entitled by a MoU executed on 24.04.2013 by the Governments of India and UAE [Abu Dhabi] on Bilateral Air Services vastly enhance Etihad’s air traffic, measured by seat capacity, between the two countries. This arbitrarily determined entitlement, tantamount to free provision of India’s sovereign airspace to a foreign airline, hence fraught with serious national security issues, is patently for sweetening the private purchase of Jet Airway’s substantial equity by Etihad.
What is distressing is that the minuted Note signed by Finance Minister Mr. P. Chidambaram dated 22.04.2013 [Annexure 1] reveals that this rocket speed clearance of the deal is on your “direction”. The enclosed Note in Annexure 1, sanitized to delete file notings of officials and signatures [including of FM], is self explanatory.
News media reveal that the inked deal on bilateral air space use is to be cleared by the Cabinet soon upon your return from Japan, and the Etihad equity purchase is to be put up and cleared by the FIPB and signed by the FM around 7.6.2013.
My usually reliable sources abroad tell me that this deal if finally cleared and implemented would destroy Indian airline industry, particularly Air India, and empower a foreign airline and a nation known for money-laundering become a hub of India’s passenger traffic.
That is why the Parliament’s Standing Committee on Transport, Tourism and Culture in its Report submitted early this month on the Ministry of Civil Aviation’s Demand for Grants (2013-14) stated [paras 77-94] that this Bilateral Agreement [now being processed for execution at an uncharacteristic and unprecedented pace], is reconsidered since in it is not in the national interest. The Committee has also recommended [para 94] penalization of Jet Airways for clandestinely selling its London route entitlement to Etihad even before the deal is sealed, and without informing the Government of India.
Therefore if you do not order a comprehensive review of these two interlocking agreements i.e., [1] between GOI and UAE of use of air space for flights and seats offered and [2] purchase of Jet Airways equity, you will be directly responsible for an arbitrary and unreasonable deal in which windfall gains will be made by private and foreign parties at the cost of the nation and hence without any public interest.
Prima facie, this would attract Section 13(1)(d) (iii) of the Prevention of Corruption Act (1988) and make you and some others culpable under the said Section.
The common talk in UAE is that following the Supreme Court’s cancellation of the 2G Spectrum licence of the Etisalat Telecom, which licence was illegally bought by them from Swan Telecom, the illegal beneficiaries from that deal who are highly placed in your government, have sought by this airlines’ deal to mitigate formal and informal losses suffered by Etisalat and hence UAE. In this connection, the undue interest shown by the Chairperson of the National Advisory Council, Ms. Sonia alias Antonia Gandhi, in processing of these two agreements at rocket speed is worthy of notice in the national interest.
If you decide to direct a review of these two aforesaid agreements, I shall happy to assist your government in the entire matter. Otherwise, aggrieved by your disregard of public interest I shall approach the Supreme Court by way of a Public Interest Litigation.
Warm regards,
Yours Sincerely
Subramanian Swamy