The Central Bureau of Investigation on Tuesday issued look-out circulars for the accused in a Rs 22,842 crore loan fraud case -– the biggest in the country thus far.
The accused are the ABG Shipyard’s directors and promoters -- Rishi Kamlesh Agarwal, Santhanam Muthaswamy, Ashwani Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia; the circular is intended to alert the authorities at ports, airports and other entry and exit points, so that they can be apprehended if they try to flee the country.
The accused have been located in India. Subsequently, the LOCs were issued by the CBI. Earlier, the State Bank of India had also put out LOCs against the main accused in 2019, said a CBI officer.
ABG Shipyard allegedly defrauded 28 banks, including the SBI, of Rs 22,842 crores; these funds were diverted to at least 98 related companies, including an international subsidiary, sources told a TV channel. ABG Shipyard was engaged in shipbuilding and ship repair and its yards were located in Dahej and Surat in Gujarat. The Congress party has raked up the company's Gujarat past and how it was extended undue favours by the powers that be.
The latest lookout circular is an addition to a never ending series of similar cases -- from the Punjab National Bank scam involving businessmen Nirav Modi to the bankrupt Kingfisher Airlines' boss Vijay Mallya's loan default. All of them are fighting extradition to India.
In needs to be mentioned here that the withdrawal of General Consent to CBI investigation by certain States has made the registration of bank fraud cases more challenging. There are around 100 high-value bank fraud cases that could not be registered due to non-accordance of specific consent under section 6 of the DSPE Act by State Governments where the general consent has been withdrawn.
According to the CBI, the ABGSL was in business with the State Bank of India since 2001. The account turned into an NPA on 30.11.2013, as per the SBI. As per the bank complaint, the NPA is to the tune of Rs 22,842 crore (approximately) and the bulk of the disbursement was between 2005 and 2012 by a consortium of 28 banks led by the ICICI Bank and including the SBI.
“The account was restructured under the CDR mechanism on 27.03.2014. However, the operations of the company could not be revived. On 10.09.2014, M/s N V Dand & Associates was deputed to conduct a stock audit of ABGSL. The Audit Firm submitted its report on 30.04.2016 and observed various faults on the part of the accused company. Subsequently, the account of ABGSL was declared NPA on 30.07.2016 w.e.f. 30.11.2013,” the CBI claimed in a statement.
In keeping with a policy implemented since 2014 of the red-flagging of suspect accounts, commissioning forensic audits by empanelled forensic auditors and making CMDs liable, a forensic audit was initiated based on the lenders’ decision in the Joint Lenders’ Meeting dated 10.04.2018. M/s Ernst & Young LLP was appointed Forensic Auditor, the CBI stated.
“As per the usual practice, these forensic audits cover a period starting approximately three to four years prior to the date of declaration of NPA, which, in this case, was 2016. The forensic audit of ABGSL therefore covers the period from 2012 to 2017. Meanwhile, the company ABGSL was also referred to NCLT, Ahmedabad, on 1.8.2017 by ICICI Bank, being lead bank, for Corporate Insolvency Resolution Process (CIRP). In between April 2019 to March 2020, various Banks of the consortium declared the account of M/s ABG Shipyard as fraud,” the CBI claimed.
“The fraud is primarily on account of a huge transfer by ABGSL to its related parties and subsequently making adjustment entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting the bank loans and funds were diverted to purchase huge assets in the name of its related parties. During the perusal of records and initial investigation, it is seen that the critical period was 2005-2012," the agency’s statement stated.
The SBI complained to the CBI on August 25, 2020 (after the CBI had raised queries in the complaint made in 2019), to look into the matter of the aforesaid bank fraud by the ABGSL and its directors. In the instant case, there are 28 banks involved in consortium, with huge amounts of disbursement. There were different kinds of bank loans including CC loan, term loan, letter of credit, bank guarantee etc. that were given as advance by the banks.
“In continuation of the investigation, searches at 13 locations were conducted on 12.02.2022. Several incriminating documents, such as books of accounts of the accused borrower company, purchase/sales details, minutes of meetings of Board, share registers, various contract files, etc were recovered, which are being scrutinised. Also, bank account details of the accused as well as related parties have been obtained.
