The Central Bureau Of Investigation (CBI) has recorded the biggest bank loan scam in its history as Gujarat-based shipbuilding company ABG Shipyard committed fraud of Rs 22,842 crores. Apart from the agency file, it is the biggest fraud in the history of India.
ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group which is engaged in shipbuilding and ship repair.
28 banks defrauded in 5 years
Between 2012 and 2017, the company secured credit facilities of Rs 22,842 crore from 28 banks and financial entities. The firm created a series of transactions to deceive a consortium of banks including State Bank of India (SBI), IDBI and ICICI.
Cabinet, reserved officers
The agency hired the firm and former chairman and chief executive, Rishi Kamlesh Agarwal, for allegedly deceiving a consortium of banks led by the State Bank of India, Trade standard reported.
Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and ABG International Pvt Ltd were also appointed.
They were charged under the Prevention of Corruption Act and several sections of the IPC for criminal association, cheating, breach of trust and abuse of official position.
Following SBI’s complaint
CBI responded to the complaint filed by the bank two years ago on November 8, 2019. Following the complaint, the agency sought clarification on March 12, 2020.
The bank later filed another complaint in August 2020. After investigating the matter for almost a year and a half, the CBI filed an FIR last week, February 7.
BS cited Ernst and Young’s forensic audit, which said the defendants had conspired and committed unlawful activities – embezzlement, embezzlement and criminal breach of trust over five years.
The funds were used for all purposes other than those for which the banks sanctioned them. According to BS, the loan account was declared a non-performing asset (NPA) in July 2016 and fraudulent in 2019.
Affected by falling demand for commodities
SBI cited ABGSL as an important player in the shipbuilding industry in India. Shipyards are located in Dahej and Surat. In Surat, the yard builds vessels up to 18,000 deadweight tons (DWT) and 1,20,000 deadweight tons (DWT) in Dahej.
According to the report, the company has built more than 165 vessels, including 46 for the export market, over the past 16 years. Vessels include newsprint carriers, self-unloading and loading bulk cement carriers, international classification floating cranes, etc.
However, demand for commercial vessels has plummeted due to an industry slump since 2015. Losses have worsened further due to a lack of defense orders, which has made it difficult for the company to recoup .
“The global crisis has impacted the shipping industry due to falling raw materials, prices and freight demand. In addition, the cancellation of contracts for a few vessels and ships has piled up inventory , which led to a lack of working capital, leading to a significant increase in the cycle, thus aggravating the liquidity problem and the financial problem”, BS cited the bank statement.
“The company was referred to NCLT, Ahmedabad, by ICICI Bank for CIRP,” he added.
13 locations attacked
CBI conducted search operations at 13 locations including Mumbai, Pune, Bharuch, etc. They searched the premises of the company, the accused directors and other officials and seized several documents.
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