Biggest Bank Loan Scam In CBI History! ABG Shipyard Frauds Rs 22,842 Cr With 28 Banks In 5 Yrs

The Central Bureau Of Investigation (CBI) has registered the biggest bank loan scam in its history, with Gujarat-based shipbuilding company ABG Shipyard committing a fraud of Rs 22,842 crores. Besides the agency's record, this is the biggest fraud in Indian history.

ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group which is engaged in the business of shipbuilding and repair.

Defrauded 28 Banks In 5 Years

Between 2012-2017, the company was sanctioned credit facilities of Rs 22,842 crores from 28 banks and financial entities. The firm created a series of transactions to cheat a consortium of banks, including State Bank of India (SBI), IDBI and ICICI.

Firm, Officers Booked

The agency has booked the firm and former chairman and managing director, Rishi Kamlesh Agarwal, for allegedly cheating a consortium of banks led by State Bank of India, Business Standard reported.

Executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and ABG International Pvt Ltd have also been named.

They have been charged under the Prevention of Corruption Act and several sections of the IPC for criminal conspiracy, cheating, criminal breach of trust and abuse of official position.

Acting On SBI's Complaint

CBI acted upon the complaint filed by the bank two years ago, on November 8, 2019. Following the complaint, the agency sought clarification on March 12, 2020.

Later, the bank filed another complaint in August 2020. After investigating the case for nearly one and a half years, the CBI filed an FIR last week, on February 7.

Misappropriation Of Funds

BS quoted the Forensic Audit by Ernst and Young, which said that the accused conspired together and committed illegal activities - diverting funds, misappropriation and criminal breach of trust in five years.

The funds were used for all the purposes other than for which the banks sanctioned them. According to BS, the loan account was declared a non-performing asset (NPA) in July 2016 and fraud in 2019.

Affected By Fall In Commodity Demands

SBI quoted ABGSL as a significant player in the shipbuilding industry in India. The shipyards are located at Dahej and Surat. In Surat, the yard builds vessels up to 18,000 deadweight tonnage (DWT) and 1,20,000 deadweight tonnage (DWT) at Dahej.

According to the report, the company has constructed more than 165 vessels, including 46 for the export market, in the last 16 years. The vessels include the newsprint carriers, self-discharging and loading bulk cement carriers, floating cranes with international classification, and so forth.

However, the demand for commercial vessels dropped due to a fall in the industry since 2015. The losses further escalated due to a lack of defence orders, making it difficult for the company to repay.

"Global crisis has impacted the shipping industry due to fall in commodity, prices and cargo demand. Besides, cancellation of contracts for a few ships and vessels piled up inventory, which resulted in a lack of working capital, causing a significant increase in the operating cycle, thereby aggravating the liquidity problem and financial problem," BS quoted the bank's statement.
"The company has been referred to NCLT, Ahmedabad, by ICICI Bank for CIRP," it added.

13 Locations Raided

CBI conducted search operations at 13 locations, including Mumbai, Pune, Bharuch, etc. They raided the company's premises, the accused directors and other officials and seized multiple documents.

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