Case Filed Against Shipyard Alleging $3 billion Bank Fraud

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  • Pegged at Rs 22,842 crore, this is India’s biggest banking fraud. Nirav Modi and his uncle defrauded PNB of around Rs 13,200 crore.
  • Accused had colluded together and committed activities by way of diversion of funds for the purpose other than for which the funds were released by the bank: CBI
  • Forensic audit was done by Ernst & Young which said global crisis impacted shipping business due to fall in commodity demand and prices and subsequent fall in cargo demand.

The Central Bureau of Investigation (CBI) on Saturday filed a case against ABG Shipyard Limited and its directors/promoters Rishi Kamlesh Agarwal, Santhanam Muthaswamy, Ashwani Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia for allegedly duping 28 banks of Rs 22,842 crore, reports the New Indian Express.

FIR registered

The AC V unit of the CBI HQ Delhi has registered the FIR on 7th February and has started the investigation. Searches were carried out at searches at 13 places including Mumbai, Pune, Surat Bharuch and other places.

The consortium of 28 banks was led by ICICI Bank. The said private company/borrower company based at Surat (Gujarat) was engaged in the business of shipbuilding and ship repair. It was further alleged that the accused had colluded together and committed activities by way of diversion of funds for the purpose other than for which the funds were released by the bank,” the CBI said in a press statement on Saturday.

Those who have been named in the FIR filed by the AC V unit of the CBI include ABG Shipyard’s then chairman and managing director Rishi Kamlesh Agarwal, executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal, Ravi Kumar Nevetia and another company ABG International Private Limited which stood as guarantor.

Criminal conspiracy case

The criminal case has been registered on 7th February under sections of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under sections of the Indian Penal Code and the Prevention of Corruption Act. As per the CBI FIR, the SBI first approached the probe agency on 8th November 2019. It, however, sought some clarifications on 12th March 2020.

The SBI filed a fresh complaint on August 2020. After going through it and scrutinising it for nearly 18 months, the CBI on 7th February filed an FIR. ABG Shipyard Limited has sanctioned credit facilities from 28 banks and financial institutions with the SBI having exposure of Rs 2,468.51 crore.

Misappropriation and criminal breach of trust

The E&Y Forensic Audit has shown that between 2012-17, the accused colluded together and committed illegal activities including diversion of funds, misappropriation and criminal breach of trust. Funds were used for purposes other than for which they were released by banks.

Huge amounts were allegedly transferred by the said private company to its related parties and subsequently adjustment entries were made. It was also alleged that bank loans to the said private company were diverted and huge investment was found to be made in the overseas subsidiary,” the CBI said.

It was further alleged that funds from banks were diverted to purchase huge assets in the name of its related parties. A forensic audit was done by Ernst & Young which found that ABG group’s flagship company was ABG Shipyard Limited.

Shipping business impacted

ABG shipyard company was engaged in the business of building of ship and ship repair. Rishi Aggarwal was the director. The shipyard of the ABG group was located in Dahej and Surat. ABG constructed 165 vessels (46 for the export market) in 16 years.

The forensic audit noted that the global crisis impacted the shipping business due to a fall in commodity demand and prices and a subsequent fall in cargo demand. There was no demand for commercial and defence vessels in 2015 which badly affected the business.

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Source: The New Indian Express

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