How does Naresh Goyal always get his way?

First, how did Goyal's Jet Airways operate for three years without a security clearance? Second, how come the home ministry gave him his security clearance just the precise number of hours later which helped him to wriggle out of a deal with Air Sahara that would have cost him a fortune? Third, how did his security clearance come through despite intelligence inputs that he might be involved with Dawood Ibrahim and Chhota Shakeel? Naresh Goyal is a man of many faces—but which one is the right one?

By Shahid Faridi

How does Jet Airways' chairperson Naresh Goyal always manage to have his way? This has long been one of the most-frequently debated questions in aviation circles. The perplexing question popped up once again when the indubitably powerful Goyal succeeded in pushing a rabbit back into a hat and pulling out of the deal to acquire Air Sahara—which had hit an air pocket—thus saving himself a fortune in outgo.

Jet Airways' deal to acquire Air Sahara collapsed on June 22, 2006 because the Union ministry for home affairs (MHA) did not grant security clearance to Goyal, quadrupling the "insult" by doing the same to the four other directors whose names had been proposed along with Goyal's as directors on the board of Air Sahara.

Industry watchers are groping for answers to what stopped Goyal from putting his imprimatur on the deal by nominating some other person as chairperson of the Air Sahara board till such time as the MHA granted his security clearance—which, as matters went, was only a matter of time, despite Goyal's much-commented-upon dubiety. The deal could then have been "saved", and he could have taken over as chairperson of Air Sahara immediately after getting his MHA clearance.
Most enigmatic to industry watchers was the fact of Goyal's strange recalcitrance given the possibilities, his blunt refusal to nominate anyone else: not even his wife—who takes an active interest in his airline business and whose name had cropped up as someone who could have been nominated as chairperson of the Air Sahara board—passed his gauntlet.

The deal then crumbled because the deadline naturally expired, in the course of things, on June 21, 2006. Then, something even stranger happened: within hours of the deal belly-flopping, the MHA issued Goyal's security clearance.

Although Jet Airways blamed the deal's disintegration on the ministry of civil aviation's protraction in granting certain approvals regarding transfer of slots, rights, counters, etc, the obloquy doesn't wash with most industry watchers.

Top Sahara officials argue that they would have agreed to extend the deadline if Jet had showed any inclination at all "to honour the contract". Then, again, both Jet and Sahara officials declined to speak on record, on grounds that the matter was sub-judice.

But the signs seem to be unambiguous: there are many who believe that Naresh Goyal used that critical delay that the MHA provided in getting his security clearance to wriggle out of a deal that had become one of the key factors in the plummeting of Jet Airway's stock to Rs 650 per share from Rs 1,300 per share days before the deal was announced. A halving of share price would have hurt even Naresh Goyal's deep pockets.

But exactly how did Goyal manage to get his security clearance delayed by the precise number of hours that he would need to slip out of the Sahara deal and, at the same time, not adversely impact the considerable fortunes of Jet Airways?

For Naresh Goyal, this is economic sleight of hand that is not particularly difficult, say industry watchers, pointing out that Jet Airways had continued operating for three years during the Bharatiya Janata Party (BJP)-led National Democratic Alliance government, when the then Union home minister, L K Advani, had reined back Goyal's security clearance. The then civil aviation secretary, A H Jung, had written a letter on January 4, 2002

to the then home secretary, Kamal Pandey (see documents), reminding him that the ministry of civil aviation had been seeking comments on the security status of the reconstituted board of directors of Jet Airways for three years—without any success.

Despite the fact that the dates of the original letter and the nine reminders sent to the MHA in this regard by the civil aviation ministry were mentioned in Jung's letter, the MHA sat on a response. Following this intractableness, the then civil aviation minister, Rajiv Pratap Rudy, himself wrote to Advani on December 9, 2003.

Rudy wrote: “Kindly refer to the correspondence resting with the MHA's OM No. II/20034/98-IS (US.D.IV) dated 24.10.2003 regarding security clearance of board of directors of M/s Jet Airways (India) Pvt Ltd.

"The matter was initially taken up with the MHA in March 2000. However, despite a number of references over the past three years, a clear response from the MHA has not yet been received. This ministry has been put in an awkward position in the absence of categorical advice of the Ministry of Home Affairs as M/s Jet Airways continues to operate as a scheduled airline without security clearance of their reconstituted board.

"Five Parliamentary Assurances are pending on this subject with us. We are unable to fulfil these in the absence of final reply from MHA. Besides, this issue was also raised in meetings of the Parliamentary Standing Committee of this ministry.

"I shall, therefore, be grateful if the process of security clearance to the reconstituted board of directors of M/s Jet Airways Ltd could be expedited in the Ministry of Home Affairs."
Rudy's letter makes it amply clear that Jet Airways continued to operate as a scheduled airline without security clearance. So, how did Naresh Goyal manage this?

Another former civil aviation minister, Sharad Yadav, who recently went hammer and tongs against Jet Airways and even demanded Goyal's arrest forthwith, seemed to have had done zip about the issue when he had been in the Cabinet a few years ago.

Nonetheless, in a letter dated June 20, 2006 to Prime Minister Manmohan Singh, Sharad Yadav pleaded with him to "stall any move to give security clearance to Jet Airways. India is facing the international terrorism (sic) and by giving security clearance to the company, which has been found to be close to the recognised terrorist (sic), will be against the interest of the nation. While giving security clearance, we have to keep security of the nation unharmed."

Yadav wrote in the letter that during his tenure as the civil aviation minister, the issue of security clearance to Jet Airways' directors—including Naresh Goyal—had cropped up. He said that clearance to Jet Airways has not been given "because the Ministry of Home Affairs had disturbing information about the Airways…Ministry of Home Affairs had informed the MCA (Ministry of Civil Aviation) about the Jet Airways as follows:

"'According to available inputs from investigating agencies, it is revealed that Naresh Goyal and his Jet Airways have been steady recipient of large dubious investments originating from Gulf Shaikhs and his connections with Shaikhs are believed to have been used repeatedly, not only to get direct investments, but also to get a lot of tainted Indian money laundered and recycled into business in India. Much of this kind of money was reportedly generated through smuggling, extortion and similar illegal practices.

"'Inputs further indicate intermittent contacts between Naresh Goyal and underworld dons, Chhota Shakeel and Dawood Ibrahim, to settle financial issues. There is strong suspicion that parts of Goyal's investments may have accrued through the assistance of underworld groups, prominently headed by Dawood and Chhota Shakeel.'"

Yadav's loud protests after demitting office notwithstanding, Jet continued to operate without hindrance during his tenure as civil aviation minister. There are wheels within wheels, and a lot of smoke over the issue, but the question is: How did this happen?

The documents published here were released to the press by former civil aviation minister Sharad Yadav