AirAsia India has hit back over claims it has been violating financial control rules in India.
It is also facing damaging claims of corruption and bribery.
India’s Central Bureau of Investigation alleges AirAsia Group CEO Tony Fernandes and others within the parent company and AirAsia India violated the ‘foreign investment norms’ by controlling operations from its Malaysia base, thus becoming a ‘de-facto subsidiary indirectly.’
Under the rules, the airline was legally established as a joint venture with Indian firm Tata Brothers taking a majority 51% stake and Asia Group controlling the remaining equity.
"The DGCA order effectively ruled that the operations and management of AirAsia India was in accordance with… the approval granted," AirAsia India said.
"In this backdrop, AirAsia India believes that to allege that control of [the airline] is not in accordance with foreign exchange investment laws is incongruous."
AirAsia Group fired off its own statement: "AirAsia completely denies these accusations. Legal action to protect AirAsia and its interests against these allegations will be taken against any person who is known to have maliciously and frivolously instigated, and or smeared the good reputation of individuals and shareholders of AirAsia India."
Under the then Foreign Direct Investment policy, operational management responsibility must remain with an Indian entity, which is something the CBI says the airline has violated.
Authorities accuse AirAsia India of trying to bribe government officials in an attempt to relax regulations to allow AirAsia India to start flying international routes.
The CBI said it conducted searches at AirAsia office locations in Delhi, Mumbai and Bangalore and seized documents.
