The Central Bureau of Investigation (CBI) has issued Look Out Circulars (LOCs) against the former chairman and managing director of ABG Shipyard named Rishi Kamlesh Agarwal and eight others to prevent them from leaving the country due to their alleged involvement in a bank fraud case of over Rs 22,842 crore. Issuing a statement on Tuesday, the agency said that the accused have been located in India. The State Bank of India (SBI) had also opened LOC against the main accused in 2019.
The central agency has booked ABG Shipyard Ltd, its ex-CMD Rishi Kamlesh Agarwal, and a few others for allegedly cheating a consortium of banks of over Rs 22,842 crore and 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 for alleged offences of criminal conspiracy, cheating, criminal breach of trust, and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act, officials said.
As part of the probe, the CBI conducted raids at 13 locations on February 12 and had received several incriminating documents, such as books of accounts of the accused borrower company, which were being scrutinized, said officials. 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 that year.
After "scrutinizing" for over one-and-a-half-years, the CBI acted on the complaint, filing an FIR on February 7, 2022. The company was sanctioned credit facilities from 28 banks and financial institutions led by ICICI Bank, with the SBI, having exposure of Rs 2,468.51 crore, officials said.
“As per the bank (SBI) complaint, the non-profitable assets are to the tune of Rs 22,842 crores and the majority of disbursement took place between 2005 and 2012 by a consortium of 28 banks led by ICICI and included the SBI,” the CBI said in a statement.
A forensic audit by Ernst and Young has shown that between 2012-17, the accused colluded together and committed illegal activities, including diversion of funds, misappropriation, and criminal breach of trust, they said. It is the biggest bank fraud case registered by the CBI. Funds were used for purposes other than for which they were released by banks, it said.
The loan account was declared as a non-performing asset (NPA) in July 2016 and fraud in 2019. In its complaint, the SBI said ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group which engaged in the business of shipbuilding and ship repair.
The ABGSL, being a major player in the Indian ship-building industry, operates from shipyards that are located at Dahej and Surat in Gujarat, with a capacity to build vessels up to 18,000 deadweight tonnage (DWT) at Surat Shipyard and 1,20,000 deadweight tonnage (DWT) at Dahej Shipyard. The company has constructed over 165 vessels (including 46 for the export market) in the last 16 years, including specialized vessels like the newsprint carriers. self-discharging and loading bulk cement carriers, floating cranes, etc with class approval of all international classification societies like Lloyds, American Bureau of Shipping, Bureau Veritas, IRS, DNV, the complaint said.
"Global crisis has impacted the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand. The cancellation of contracts for a few ships and vessels resulted in piling up inventory. This has resulted in a paucity of working capital and caused a significant increase in the operating cycle, thereby aggravating the liquidity problem and financial problem," the complaint said.
The SBI said there was no demand for commercial vessels as the industry was going through a downturn even in 2015 which was further aggravated due to lack of defence orders, making it difficult for the company to maintain repayment schedule, it said.
"The company has been referred to NCLT, Ahmedabad, by ICICI Bank for CIRP," it said.
(with inputs from PTI)
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