CBI books Gujarat firm for Rs 22,842 crore loan fraud
In what is being termed as India's biggest loan fraud case, the Central Bureau of Investigation (CBI) has booked a Gujarat-based shipbuilding company and its former directors for allegedly defrauding banks to the tune of Rs 22,842 crore. The agency has named ABG Shipyard Ltd and its former chairman and managing director Rishi Kamlesh Agarwal as accused in the case, among others.
- The case came to light following a complaint filed by the State Bank of India.
- This is reportedly the biggest bank fraud case registered by CBI, even bigger than the Punjab National Bank scam that involved fugitive diamantaire Nirav Modi and his uncle Mehul Choksi.
- According to CBI, the loan funds were used for purposes other than for which they were released by banks.
Besides Agarwal, CBI has also named the then Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal, Ravi Vimal Nevetia, and another company ABG International Pvt Ltd in the case. The offenses against them include criminal conspiracy, cheating, criminal breach of trust, and abuse of official position under the Indian Penal Code and the Prevention of Corruption Act, officials told PTI.
In a statement, CBI said, "Searches were conducted on Saturday at 13 locations in the premises of accused including private company, directors at Surat, Bharuch, Mumbai, Pune, etc." The agency also claimed that they have recovered "incriminating documents" during the search operations.
As per reports, the SBI had first filed a complaint on November 8, 2019, against ABG Shipyard, on which the CBI had sought some clarifications on March 12, 2020. The bank filed a fresh complaint again in August 2020. After "scrutinizing" for over one and a half years, the CBI acted on the complaint, filing an FIR on February 7.
The company was sanctioned credit facilities from 28 banks and financial institutions, with the SBI having exposure of Rs 2,468.51 crore, reports said. The Forensic Audit by Ernst and Young has shown that between 2012-17, the accused colluded together and committed illegal activities, including diversion of funds, misappropriation, and criminal breach of trust, officials told PTI.
According to reports, ABG Shipyard owes Rs. 7,089 crore to ICICI Bank, Rs. 3,639 crore to IDBI Bank, Rs. 2,925 crore to State Bank, Rs. 1,614 crore to Bank of Baroda, and Rs. 1,244 crore to Punjab National Bank, among others.
CBI said the firm diverted loan funds through subsidiaries in Singapore and through other means between 2012-2017. It transferred huge amounts to "its related parties and subsequently, adjustment entries were made," the agency added. It further claimed that bank loans to the company were diverted to make investments in the "overseas subsidiary." The funds were also used to purchase assets, it added.
Notably, the loan to the company was declared a non-performing asset (NPA) in July 2016. As per reports, the company is already facing proceedings in the National Company Law Tribunal (NCLT).
ABG Shipyard, owned by ABG Group, is one of India's major players in shipbuilding and ship repair. ABG shipyards are located in Dahej and Surat in Gujarat. It has the capacity to build vessels up to 18,000 deadweight tonnage (DWT) at Surat Shipyard and 1,20,000 DWT at Dahej Shipyard. It has constructed over 165 vessels, 46 for overseas customers, in the past 16 years.
