Aug. 27, 2015
Shri Narendra Modi
Prime Minister of India
South Block
New Delhi.
Dear Prime Minister:
I am writing to apprise you of the proposed Civil Aviation Policy which I understand is to be reviewed by you. The proposed policy has been drafted by the MoCA on the “expert advice” of a foreign consulting company viz.,KPMG. What kind of rigged expertise it is becomes clear from the following facts on the conflict of interest issues:
1.The conflict of interest with KPMG is as follows:
- Vistara is a 51:49 Joint Venture between Tata Sons and Singapore International Airlines (SIA).
- Singapore Airlines (49% partner in Vistara) appointed KPMG as its external auditor in July 2015. Thus KPMG’s appointment as advisor by the MoCA is a clearly conflicted biased and collusive appointment, as they will serve the interests of their client.
2. The conflict with Tata Group the 51% shareholder in Vistara is as follows:
- Tata Group (through Tata Sons) is one of the bidders for Navi Mumbai International Airport. KPMG has done the financial and feasibility study and are providing transaction advisory services to them.
- Tata Motors/Tata Motors Finance: Internal Audit, Quality Assurance, Business Planning and Valuations.
- Tata Chemicals: Appointed KPMG for Governance Structure of CSR, Safety and Sustainability Committees.
- Tata Steel: Engaged KPMG for implementation of Internal Financial Control, Advisory on Related Party Transaction, review of post completion projects, Consultancy on Coal Block Option and Consultancy for Mine Developing and Operations.
- BSR & Co. (KPMG) is the Internal Auditor for Tata Securities-FY14
- BSR & Co. (KPMG) appointed for statutory certification of Swap ratio for merger of CMC Ltd with TCS
- BSR & Co. (KPMG) is statutory auditor for Tata Asset Management -FY14
- TCS has parterned with KPMG for a tax planning software named Intercompany Pricing Solution
It is therefore clear that the Advisor and Consultant to Tata Group and auditor to SIA, KPMG, is now the advisor to the Ministry of Civil Aviation as well to draft a policy for the benefit of foreign airlines at the cost of national interest. The appointment of KPMG is therefore totally collusive, conflicted and biased and KPMG should have been disqualified from being GOI’s consultant on this issue.
Foreign airline run Vistara and Air Asia illegal JVs are the only airlines supporting the abolishmentof the 5/20 rule and Route Dispersal Guidelines (RDGs) which will be solely beneficial to their business interests and against the interest of all existing Indian owned airlines operating in India including our government owned Air India.
The Federation of Indian airlines (FIA) representing every scheduled airline of India as also Air India have been opposing the change in policy on RDG and of 5/20 for the last two years. In Delhi High Court my Writ Petition filed to challenge legality of the Vistara and Air Asia JVs as violative of the Cabinet Resolution of 2012 on FDI in Indian owned airlines is in the final hearing stages. Thus in any case the decision on a new policy proposed can await the outcome of the said Writ Petition.
Moreover KPMG prior to this appointment in 2014 had publicly called for the abolition of the 5/20 rule thus expressing their views in support of Vistara, Singapore Airlines and the Tata Group.
I therefore hold that KPMG has been deliberately chosen collusively to support the case made out by the MoCA to abolish 5/20 thus favouring Vistara, Singapore Airlines and Tata Group.
Therefore I suggest that the Government should forthwith cancel KPMG’s appointments as of corrupt motives investigate independently the reason and process of their appointment by the MoCA. It also raises the question as to why does the Government of India require a foreign consultant to formulate its Indian Aviation Policy particularly the Route Dispersal Guidelines and 5/20?
With my best wishes and regards,
Yours sincerely,
(SUBRAMANIAN SWAMY)