Behavioural biases that damage your investments!
In matters of investment, the sooner you acknowledge your mistakes, the sooner you'll find help in getting out of the soup. To break free from biases, the first step should be to identify those biases, says, Balwant Jain, Tax and Investment Expert.
Mumbai: A joint forum of eight Air India unions has sought an independent forensic audit into the operations of the airline’s provident fund trusts, alleging losses to the tune of Rs 1,085 crore due to “questionable investments” by the trusts.
In an e-mail to Civil Aviation Minister Hardeep Singh Puri on Tuesday, the forum also asked for his intervention in the matter related to two trusts — one each of the erstwhile Indian Airlines and Air India.
Stating that it was “compelled” to write to the Minister to seek his guiding light and help, in regard to the crisis that has engulfed Provident Fund trusts, both AIEPF & IAEPF trusts, it said the two trusts together are one of the largest in the country.
“It has come as a shock to all of us unions, many of whom were not involved or aware of the day to day functioning of the Provident Fund trusts of Indian Airlines and Air India that huge losses have been incurred by both trusts, due to questionable investments in companies like ILFS and Dewan Housing, among others, which collapsed,” Air India Joint Action Forum of Unions said in the e-mail, accessed by PTI.
Responding to PTI queries on these allegations and demand for forensic audit of the two funds, an Air India spokesperson said, “These are all internal issues of the organization on which we would not like to comment.”
There are two separate Provident Fund trusts in erstwhile Air India and erstwhile Indian Airlines, which are governed by the 1925 Provident Fund Trust Act.
Erstwhile Indian Airlines and erstwhile Air India were merged into a single entity, National Aviation Company of India Ltd, which was later renamed as Air India Ltd.
“We have also learnt that even though the subsidiary companies had become separate legal entities almost 14 years ago, incorporated in 2007/08, they continued in the main AIEPF/IAEPF trust, with payouts on retirements from these trusts, without the PF trusts receiving the corresponding timely contributions from these companies in some cases for years,” the Forum stated.
Thousands of Air India employees have their entire life savings in these two provident fund trusts and such huge losses would erode their capitalised value leading to collapse, it said.
The Forum claims representation of over 10,000 Air India staff members comprising pilots, engineers, cabin crew and ground staff.
“We have only learnt of the magnitude of these losses allegedly incurred through some questionable investments, by means of a MOCA letter… which is in public domain, wherein the figure of losses mentioned is Rs 1,085 crore,” the unions stated.
Alleging that there are also some “advisory third party consultants” on whose advice and reportedly through whom most of these investments have been done, the Forum said “there seems to be more than meets the eye and we feel an independent forensic audit of both the trusts’ operations of the last decade is necessary and overdue (as well).”
The employees are not to blame for this shortfall and the costs as a consequence of transfer of the provident fund trusts to the EPFO due to the proposed privatisation, which will add to PF trust losses/capital erosion due to the EPFO demand to liquidate our assets, apart from transition expenses and entry load, the forum said.
“It is in the light of this that we seek your intervention and support so that the government assist us to cover these losses and may subsidize the transition of the Air India/Indian Airlines PF trusts to the EPFO as exempted trusts under the 1952 Act, without any loss to any employee,” the Forum said.