AirAsia India, the budget airline part-owned by Malaysian tycoon Tony Fernandes, has hit out at allegations that it bribed Indian officials in an attempt to change the country’s strict aviation rules.

Shuval Mandal, a director at the airline, said his company “refutes any wrongdoing”, after Indian criminal investigators accused Mr Fernandes and his associates of being part of a “criminal conspiracy” that involved secretly hiring lobbyists and bribing civil servants.

Mr Mandal added: “[The company] is co-operating with all regulators and agencies to present the correct facts. In November, 2016, AirAsia India had initiated criminal charges against its ex-CEO and had also commenced civil proceedings in Bangalore for such irregularities. We hope to bring early resolution to all such issues.”

Mr Fernandes did not respond to a request to comment. 

Mr Fernandes’s AirAsia joined forces with India’s Tata group in 2013 to form AirAsia India, a budget carrier in which each held 49 per cent.

Under Indian rules, the airline should have been run by the Indian conglomerate, but a report published by India’s Central Bureau of Investigation and citing “reliable source information” has alleged that Mr Fernandes was actually in control.

The report also accused the company of setting up a $1.8m fund to pay lobbyists and “unknown public officials” in an attempt to get the government to drop a law that airlines could only fly internationally if they had been operating for five years and owned 20 aircraft.

That requirement to have been running for five years was scrapped in 2016, though companies still have to own 20 aeroplanes before flying internationally. AirAsia India has said it hopes to meet this requirement by the end of this year.

“Mr Tony Fernandes wanted the airline venture to be able to fly internationally from day one,” the report said. “Source information has further disclosed that unknown public servants…entered into a criminal conspiracy…to expedite the approval process and change in aviation policies to suit the company.”

It went on to say that an AirAsia employee handed over a closed packet containing Rs5m ($74,000) to a man call “Mr Sriram” in the coffee shop of an upmarket Mumbai hotel to “facilitate the removal of the 5/20 rule”. It did not say who Mr Sriram is.

AirAsia India is already under investigation by India’s Enforcement Directorate for alleged “questionable” payments worth Rs223m.

That allegation, about which little has been made public and to which AirAsia India has not responded, was at the centre of a dramatic boardroom row between Tata Sons and its former chairman Cyrus Mistry.

Mr Mistry was dismissed as chairman in 2016, and subsequently said he wanted to expose alleged ethical and governance breaches at India’s largest conglomerate — including the payments made by its joint venture with Mr Fernandes’ company.

Shares in Air Asia dropped 5.4 per cent to RM3.13 on Wednesday morning in Malaysia.

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