CBI books ABG Shipyard, directors in Rs 22,842 crore loan fraud

It is the biggest bank fraud case registered by the Central Bureau of Investigation

ABG Shipyard Ltd and its then Chairman and Managing Director Rishi Kamlesh Agarwal have been booked by the CBI in its biggest bank fraud case valued at Rs 22,842 crore.

The investigating agency registered the case on February 7, almost one and half years after SBI filed a fresh complaint alleging that the company and its officials allegedly committed fraud with a consortium of banks that lent them money.

Besides Agarwal, the agency has also named the then Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and another company ABG International Pvt Ltd.

Sections related to criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the IPC and the Prevention of Corruption Act have been invoked against the accused.

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 2020.

According to the FIR, the company was sanctioned credit facilities from 28 banks and financial institutions with the SBI having exposure of Rs 2468.51 crore. A 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.

In its complaint, which is part of the FIR, the SBI has claimed that the shipping company diverted funds for purposes other than for the purpose for which the funds were released by the banks.

ABG Shipyard Ltd, a major player in the Indian shipping building industry, is the flagship company of the ABG Group. It has the capacity to build vessels up to 18,000 deadweight tonnage (DWT) at Surat Shipyard and 1,20 lakh DWT at Dahej Shipyard.

It has constructed around 165 vessels, including 46 for export markets, in the last 16 years, including specialised vessels like newsprint carriers, self-discharging and loading bulk cement carriers among others.

According to the SBI, the global crisis has impacted the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand. Cancellation of contracts for few ships/vessels in piling up of inventory and this resulted in paucity of working capital and caused significant increase in the operating cycle, thereby aggravating the liquidity and 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...Thus company was unable to service the interest and instalments on the due date," the SBI said in its complaint.

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