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Supervisory circulars issued against directors of ABG shipyard in bank loan fraud case

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Supervisory circulars issued against ABG shipyard administrators in nearly 23,000 crore fraud case

Strong points

  • CBI has issued lookouts against Rishi Kamlesh Agarwal, former chairman of ABG shipyard.
  • Such circulars were also issued against 8 other people in a case of bank fraud over Rs 22,842 crore.
  • Lookouts have been issued to prevent them from leaving the country.

The CBI said on Tuesday it had issued lookouts against Rishi Kamlesh Agarwal, the former chairman and chief executive of ABG Shipyard, and eight others in a bank fraud case over Rs 22,842 crore. The agency, in a statement, said surveillance circulars (LOC) had already been opened by the Central Bureau of Investigation (CBI) against the accused, while claiming that the accused had been located in India.

Lookouts have been issued to prevent them from leaving the country, officials said. The State Bank of India (SBI) had also opened LOCs against the main defendant in 2019.

The CBI booked ABG Shipyard Ltd and its then Chairman and Managing Director Rishi Kamlesh Agarwal and others for allegedly defrauding a consortium of banks out of more than Rs 22,842 crore.

The agency also named then-executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and fellow company ABG International Pvt Ltd for alleged offenses of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act, they said.

As a follow-up to the investigation, the CBI carried out searches at 13 locations on February 12.

Officials said they had received several incriminating documents, such as the books of the accused borrowing company, which were under review.

The bank had first filed a complaint on November 8, 2019 on which the central investigation agency had requested clarification on March 12, 2020.

The bank filed a new complaint in August of the same year. After “examining” for more than a year and a half, the CBI responded to the complaint by filing an FIR on February 7, 2022.

The company has secured credit facilities from 28 banks and financial institutions led by ICICI Bank, with SBI having an exposure of Rs 2,468.
51 crore, they said.

An Ernst and Young forensic audit showed that between 2012 and 2017, the defendants colluded and engaged in illegal activities, including embezzlement, embezzlement and criminal breach of trust, they said. declared.

This is the largest bank fraud case recorded by the CBI. The funds were used for purposes other than those for which they were released by the banks, he said. The loan account was declared a non-performing asset (NPA) in July 2016 and a fraud in 2019.

In its complaint, the SBI stated that ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group which is engaged in building and repairing ships.

ABGSL, being a major player in the Indian shipbuilding industry, operates from shipyards located in Dahej and Surat in Gujarat, with a capacity to build vessels up to 18,000 deadweight tons (DWT) at the Surat shipyard and 1,20,000 dead. weight tonnage (DWT) at Dahej shipyard.

The company has built over 165 vessels (including 46 for the export market) over the past 16 years, including specialty vessels such as newsprint carriers, self-unloading and self-loading bulk cement carriers, floating cranes, etc. with class approval from all international classification societies like Lloyds, American Bureau of Shipping, Bureau Veritas, IRS, DNV, according to the complaint.

“The global crisis has impacted the shipping industry due to the fall in demand and prices for raw materials and the subsequent fall in demand for freight. The cancellation of contracts for a few ships and vessels led to an accumulation of inventories.

This has resulted in a shortage of working capital and caused a significant increase in the operating cycle, thus aggravating the liquidity problem and the financial problem,” the complaint said.

The SBI said there was no demand for commercial vessels as the industry was going through a downturn even in 2015, which was further aggravated due to lack of defense orders, which made it difficult for the company to maintain the repayment schedule, he said.

“The company has been referred to NCLT, Ahmedabad by ICICI Bank for CIRP,” he said.

Also Read: Bank Fraud at ABG Shipyard: SBI Says There Was No Delay in Filing Case

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