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Scam 2022: India’s Largest Bank Fraud

By : Profectus Magazine   /   16 Feb 2022  /   News and Updates /   Economy News

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What turned out to be the largest bank fraud in India, ABG Shipyard Ltd, its former chairman and managing director Rishi Agarwal, along with other senior-level officers have been booked by Central Bureau of Investigation (CBI) under allegations of fraud for more than Rs 22, 842 crores via loans from State Bank of India (SBI) and 27 other banks.

Based in Mumbai, ABG Shipyard is owned by the ABG Group who are in the business of ship repair and shipbuilding. The company’s shipyards are mainly located in Dahej and Surat in Gujarat. In the past sixteen years, the company has said to be constructed more than 165 vessels.

While the company’s loan account was declared as a NPA (non-performing asset) way back in November 2013, there are some speculations why the delay in complaint. SBI (lender) in its official statement said that, ‘Although ICICI Bank was the lead lender in the consortium and IDBI was the second lead, it was preferred that SBI being the largest PSB lender, lodges the complaint with CBI.’

Read the full statement here

Press release about ABG Shipyard issue. @DFS_India @FinMinIndia

Our statement -: pic.twitter.com/RP71DBhePD

— State Bank of India (@TheOfficialSBI) February 13, 2022

 

CBI in their statement said that, “The fraud is primarily on account of huge transfers by M/S ABG Shipyard Ltd to its related parties and subsequently making adjustment entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting bank loans. The critical period of the investigation is 2005-2012.”  

 Here’s a timeline to understand what exactly happened:

  • - 30 November 2013, ABG’s account turned NPA
  • - 27 March 2014, the account was re-incorporated, but the operations of company couldn’t be revived
  • - 10 September 2014, an accounting firm was appointed to conduct a shock audit of ABG Shipyard and found various faults of the alleged company
  • - 30 July 2016, the account of the accused company was declared NPA
  • - 10 April 2018, Ernst and Young LLP was enlisted as the forensic auditor
  • - 8 November 2019, SBI filed its first compliant and declared the loan account as fraud
  • - 12 March 2020, CBI demanded some clarifications on the complaint filed by SBI
  • - August 2020, a fresh complaint was filed by SBI
  • - 7 February 2022, after ‘scrutinising’ for more than one-and-a-half-year CBI acted on State Bank of India’s complaint.
  • - 12 February 2022, CBI raided 13 locations in which they found several incriminating documents.

CBI said in its official statement that, searches were conducted at 13 locations on Saturday, February 12, in the premises of the accused including private company’s directors at Surat, Bharuch, Mumbai, Pune etc. They also pointed out that Forensic audit by Ernst and Young noted that the accused colluded together and committed illegal between 2012-2017 as frauds, misappropriation and criminal breach.

While, the opposition has accused BJP of aiding the fraud as it occurred in a BJP-ruled state. Finance Minister Nirmala Sitharaman said on Monday that, “I don’t want to politicize this too much as I am sitting in the RBI office, but these noises are being made of how this is the biggest fraud under this government. One should not forget that the account was first declared an NPA in 2013.”

A lookout notice has been released for all airport authorities for several accused by CBI including Rishi Agarwal, the then executive director Santhanam Muthaswamy, directors Sushil Kumar Agarwal, Ravi Vimal Nevetia and Ashwini Kumar for alleged offenses of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the IPC and the Prevention of Corruption Act.

The lenders can only hope that this doesn’t turn into another extradition case which government would fight in any foreign country, while financial fraudsters like Nirav Modi and Vijay Mallya enjoy their runaway vacation.

With inputs from PTI

Tags

ABG shipyard, Largest fraud, bank fraud, SBI, CBI, Home

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