Supervisory circulars have been issued against bosses and senior managers of ABG Shipyard in an alleged Rs 23,000 crore bank fraud case. A surveillance circular is used to prevent anyone wanted by law enforcement from leaving the country via airports and border crossings.
The directors of the transport company include Rishi Agarwal, Santhanam Muthuswamy and Ashwini Kumar. The case is believed to be India’s biggest bank loan scam. ABG Shipyard has defaulted on loans of Rs 22,842 crore it owed to 28 banks including the State Bank of India, the Central Bureau of Investigation, or CBI, says.
ABG Shipyard diverted the funds to at least 98 related companies, sources told NDTV.
ABG Shipyard is the flagship company of the ABG Group which is dedicated to building and repairing ships. The shipyards are located in Dahej and Surat in Gujarat.
The latest supervisory circular in the ABG Shipyard case adds to a long list of similar cases in the country, from the National Bank of Punjab fraud involving businessmen Nirav Modi and his uncle Mehul Choksi to the failure to payment of the bank loan of late Kingfisher Airlines boss Vijay Mallya. All are fighting against extradition to India.
“Between April 2019 and March 2020, various consortium banks reported ABG Shipyard’s account as a fraud. The fraud is mainly due to a huge transfer by ABG Shipyard to its related parties and the subsequent making of adjustment,” the CBI said in a statement.
“The huge investments were made in its overseas subsidiary by misusing bank loans. Funds were diverted to purchase huge assets on behalf of its related parties. Upon reading the records and initial investigation , we find that the critical period was 2005-2012,” the CBI said.
The CBI said the withdrawal of “general consent” by state governments has made it more difficult to file bank fraud cases. “There are a hundred cases of high value bank fraud that could not be recorded due to failure to comply with specific consent (…) by the governments of the States where the general consent was withdrawn “, said the CBI in the press release.
States withdrawing their “general consent” to the CBI, however, have little bearing on the ABG Shipyard case, as it was filed in Delhi, where the CBI has original jurisdiction.