Bank loan

ED raids 24 locations in Mumbai, Pune, Surat

Raids by the Law Enforcement (ED) Directorate were underway on Tuesday at 26 locations across the country in connection with the ABG Shipyard Rs 22,000 crore bank scam case.

The ED case is based on an FIR filed by the CBI.

In the case, there are 28 banks involved in a consortium with huge amount of disbursement.

There were different natures of bank loans, including CC loan, term loan, letter of credit, bank guarantee, which were given as an advance by the banks.

The fraud is mainly due to a huge transfer by ABG Shipyard Ltd to its related parties and subsequent making of adjusting entries.

It is also alleged that huge investments were made in its overseas subsidiary by misusing bank loans and that funds were diverted to purchase huge assets on behalf of its related parties.

“They took a loan of Rs 1,228 from Indian Overseas Bank, Rs 1,244 crore from Punjab National Bank, Rs 1,614 crore from Bank of Baroda, Rs 7,089 crore from ICICI Bank and Rs 3,634 crore from IDBI Bank. Later they failed to pay the bank. Initially, the bank launched an internal investigation in which it was found that the company was cheating the consortium of banks by diverting funds to different entities,” the CBI had said.

ABG Shipyard Ltd had been in business with SBI since 2001.

ABG Shipyard’s account became NPA on November 30, 2013. According to a bank complaint, the NPA is up to Rs 22,842 crore and the majority of disbursements were made between 2005 and 2012 by a consortium of 28 banks led by ICICI Bank. and including the SBI.

The account was restructured under the CDR mechanism on March 27, 2014. However, the company’s operations could not be restarted.

On September 10, 2014, NV Dand and Associates was commissioned to carry out an inventory audit of ABG Shipyard Ltd.

The firm submitted its report on April 30, 2016 and found various faults on the part of the company in question. Subsequently, the ABG Shipyard Ltd account was declared NPA.

In accordance with a policy put in place since 2014 consisting of reporting suspicious accounts, having forensic audits carried out by certified forensic auditors and holding CMDs accountable, a forensic audit was initiated on the basis of the decision of the lenders during the joint meeting of lenders on April 10, 2018.

Ernst & Young LLP has been appointed forensic auditor. In line with standard practice, these forensic audits cover a period beginning approximately three to four years prior to the NPA filing date, which in this case was 2016.

The forensic audit of ABG Shipyard Ltd therefore covers the period from 2012 to 2017.

Meanwhile, ABGSL Company was also referred to NCLT, Ahmedabad on August 1, 2017 by ICICI Bank for Corporate Insolvency Resolution Process (CIRP).

Between April 2019 and March 2020, various consortium banks reported ABG Shipyard’s account as a fraud.

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Posted: Tuesday, April 26, 2022, 12:04 PM IST