Bank loan

ABG Shipyard developer detained in Rs 22,842 cr bank loan fraud

NEW DELHI: In the latest development of the Rs 22,842 crore fraud allegedly committed by ABG Shipyard company, the Central Bureau of Investigation has arrested its promoter Rishi Kamlesh Agarwal.

He will appear in the Rouse Avenue court in Delhi on Thursday. The CBI will request his custody for two weeks.

The CBI had recently revealed the shocking fact that there were approximately 100 cases of high value bank fraud that could not be recorded due to non-compliance with specific consent u/s 6 of the PSDE Act by state governments. where general consent has been withdrawn.

The CBI seized incriminated documents, namely accounting books of ABG Shipyards, its sale-purchase details, minutes of board meetings, share registers, contract files.

In addition, bank details of ABG Shipyards and related parties have been obtained. Subsequently, surveillance circulars (LOC) against the defendants have already been opened by the CBI. The State Bank of India had also opened lines of credit against the main defendant in 2019.

In this case, there are 28 banks involved in a consortium with a huge amount of disbursement.

There were different types of bank loans including CC loan, term loan, letter of credit, bank guarantee, etc. which were given as an advance by the banks.

The fraud is mainly due to a huge transfer by ABG Shipyard Ltd to its related parties and subsequent making of adjusting entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting bank loans to buy huge assets on behalf of its related parties.

“They borrowed Rs 1228 crore from Indian Overseas Bank, Rs 1244 crore from Punjab National Bank, Rs 1614 crore from Bank of Baroda, Rs 7089 crore from ICICI Bank and Rs 3634 crore from IDBI Bank. paid the banks their dues. Initially, the banks launched an internal investigation in which it was found that the company was misleading the consortium of banks by diverting funds to different entities,” the CBI said.

The CBI official said that ABG Shipyard Ltd has been doing business with SBI since 2001. ABG Shipyard’s account became NPA on November 30, 2013. According to the bank’s complaint, the NPA is Rs 22,842 crore and the majority of disbursement took place between 2005 and 2012 by a consortium of 28 banks led by ICICI Bank and including SBI.

The account was restructured under the CDR mechanism on March 27, 2014. However, the company’s operations could not be restarted.

On September 10, 2014, NV Dand and Associates was commissioned to carry out an inventory audit of ABG Shipyard Ltd. The audit firm submitted its report on April 30, 2016 and found various faults on the part of the offending company. Subsequently, the ABG Shipyard Ltd account was declared NPA.

In accordance with a policy implemented since 2014 consisting of reporting suspicious accounts, having forensic audits carried out by approved forensic auditors and holding CMDs accountable, a forensic audit was initiated on the basis of the decision of the lenders during the joint meeting of lenders on April 10, 2018.

Ernst & Young LLP has been appointed forensic auditor. In line with standard practice, these forensic audits cover a period beginning approximately three to four years prior to the NPA filing date, which in this case was 2016.

The forensic audit of ABG Shipyard Ltd therefore covers the period from 2012 to 2017. Meanwhile, ABGSL company was also referred to NCLT, Ahmedabad on 1st August 2017 by ICICI Bank, being the lead bank, for the business insolvency resolution process.

Between April 2019 and March 2020, various consortium banks reported ABG Shipyard’s account as a fraud.