India’s white collar crime agency the Enforcement Directorate has started a probe into Etihad Airways’s investment in Jet Airways’ loyalty programme.
The agency is looking into possible violations of foreign exchange rules by Jet Airways and whether Etihad was actually granted legal approval for the stake.
Abu Dhabi-based Etihad took a $150 million stake in Jet Privilege in 2014 when it invested a larger sum in the airline.
Foreign owned stakes are limited to 49% in certain industry sectors including aviation under India’s foreign investment laws.
Etihad was able to buy more as Jet Privilege was apparently classified as an ‘air transport services’ company.
Etihad told local media it met all regulatory requirements at the time when it made the Jet Privilege investment.
The investigation could complicate Jet Airways’ bid to be sold as a going concern, which is looking increasingly unlikely.
The airline’s creditors are seeking bids to take over the grounded carrier which has debts of more than $1 billion.
Bidding closes at the end of this week.
