Another bump for Jet-Etihad deal as CVC seeks CBI probe

Turbulence seems unending for the Jet Airways-Etihad Airways stake purchase deal, which came about as a result of the Indian government's apparent 'liberalisation' of foreign investment rules in civil aviation.

Now, the Vigilance Commission has asked the Central Bureau of Investigation (CBI) to look into allegations made by a Bharatiya Janata Party MP about irregularities in the deal.

Nishikant Dubey, a Lok Sabha MP from Jharkhand, wrote to the Central Vigilance Commission on Saturday claiming, ''four cabinet ministers had cleared the deal between the Indian and UAE carriers in haste''.

Dubey's complaint to the CVC claims that the Congress-led United Progressive Alliance made special efforts to benefit Jet Airways.

In April, Jet Airways announced that it would sell 24 per cent of its equity to Abu Dhabi-based Etihad. Almost at the same time, the Indian civil aviation ministry signed a bilateral agreement with Abu Dhabi on mutual flight facilities.

According to Dubey's letter, on 1 March 2013, the Director General of Civil Aviation (DGCA) made some key amendments to its guidelines issued in 2008, particularly aimed at facilitating the Jet-Etihad deal.

''Clause 1.7 prevented passing on of effective control of management of a domestic airline to a foreign airline. This was deleted. Secondly, clause 1.8 was modified (amended) so that a scheduled passenger airline having FDI from foreign airline could now pass on the right to interfere in the management of the domestic airline.'' Dubey said in his complaint.

''And third, clause 1.9 prevented a domestic airline to enter into financial arrangement like lease-finance, hire-purchase with a foreign airline. This could have prevented Jet Airways to receive soft loan of $300 million at a 3 per cent interest rate. This clause was modified as to permit domestic airlines to receive such facilities from a foreign airline as well,'' according to the complainant.