New Delhi: The Central Bureau of Investigation (CBI) has filed a case against one of the largest private sector shipping companies ABG Shipyard Ltd, and its Directors Rishi Agarwal, Santhanam Muthuswamy, and Ashwini Kumar for allegedly defrauding 28 banks of ₹ 22,842 crore. They allegedly cheated a consortium of 28 banks and financial institutions led by ICICI Bank to the tune of ₹22,842 crore, the largest amount in a single bank fraud case ever.
The company is the flagship company of the ABG Group which is engaged in shipbuilding and ship repair. The shipyards are located in Dahej and Surat in Gujarat.
The central anti-corruption probe agency has named ABG Shipyard Ltd’s Chairman-cum-Managing Director – Rishi Kamlesh Agarwal, executive director – Santhanam Muthaswamy and three other directors – Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia in its First Information Report (FIR) filed on February 7 under criminal conspiracy, cheating and Prevention of Corruption Act.
According to the complaint filed by the State Bank of India (CBI) in the matter, the total exposure of 28 banks and financial institutions as on date is ₹22,842 crore, out of which the ABG owes highest amount – ₹7,089 crore to the ICICI Bank, ₹3,639 crore to IDBI Bank, ₹2,925 crore to SBI, ₹1,614 crore to Bank of Baroda, ₹1,244 crore to Punjab National Bank and so on.
The bank had first filed a complaint on November 8, 2019, on which the CBI had sought some clarifications on March 12, 2020.
The bank filed a fresh complaint in August that year. After “scrutinising” for over one and a half-year, the CBI acted on the complaint filing an FIR on February 7, 2022.
The company was sanctioned credit facilities from 28 banks and financial institutions with the SBI having exposure of ₹ 2468.51 crore, they said.
“The Forensic Audit report dated 18.01.2019 submitted by M/s. Ernst & Young LP for the period April 2012 to July 2017 revealed that the accused have colluded together and committed illegal activities including diversion of funds, misappropriation, and criminal breach of trust and for purposes other than for the purpose for which the funds are released by the Bank”, the CBI alleged in its FIR.
The central probe agency says that the fraud has taken place through the diversion of funds, misappropriation, and criminal breach of trust with an objective to “gain unlawfully at the cost of the bank’s funds”.
The forensic audit report shows the fraud has taken place between April 2012 and July 2017, it added.
“Global crisis has impacted the shipping industry due to fall in commodity demand & prices and subsequent fall in cargo demand. The cancellation of contracts for a few ships/vessels resulted in piling up of inventory. This has resulted in a paucity of working capital and caused a significant increase in the operating cycle, thereby aggravating the liquidity problem & financial problem. There was no demand for commercial vessels as the industry was going through a downturn even in 2015. Further, there were no fresh defence orders released in 2015. The company was finding it very difficult to achieve milestones as envisaged in CDR. Thus, the company was unable to service the interest and instalments on the due date,” the CBI FIR said.
ABGSL has constructed over 165 vessels.
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