Ground Report | New Delhi: What is Shipyard Scam; CBI has registered an FIR against ABG Shipyard Ltd and its directors for cheating 28 banks of Rs- 22,842 crores. Besides the former chairman Rishi 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 for alleged offences of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the IPC and the Prevention of Corruption Act.
ABG Shipyard Ltd is owned by the ABG Group, a firm engaged in the business of shipbuilding and ship repair. The shipbuilding company is based in Mumbai. The company is promoted by Rishi Agarwal. The company’s shipyards are located at Dahej and Surat in Gujarat. ABG Shipyard has constructed more than 165 vessels in the 16 years.
According to the figures from the forensic audit that were included in the CBI complaint, the company owes Rs 1,228 crore to Indian Overseas Bank, Rs 1,244 crore to Punjab National Bank, Rs 1,614 crore to Bank of Baroda, Rs 7,089 crore to ICICI Bank and Rs 3,634 crore to IDBI Bank, Rs 2,925 crore to SBI, Rs 1327 crore to Exim Bank and rest to other banks and financial institutions. Later, they didn’t pay the bank their dues. Initially, the bank started an internal inquiry in which it was found that the company was cheating the consortium of banks by diverting funds to different entities.
Although the ICICI Bank was the lead lender in the consortium and IDBI was the second lead, it was preferred that being the largest public sector bank, SBI lodges the complaint with CBI, which led CBI to take action and carry out searches of 14 locations spread across Surat, Bharuch, Mumbai and Pune in which it recovered documents that implicated the firm and those managing it. (What is Shipyard Scam)
SBI stated that “More than 2 dozen lenders, led by ICICI Bank, had disbursed money. The account had turned into a non-performing asset (NPA) in November 2013 due to the company’s poor performance.” Many attempts were made but all failed. The account was restructured under the CDR mechanism in March 2014 by all the lenders. The shipping industry was going through a downturn, so the company’s operations could not be revived.
The account was classified as NPA from November 2013 to July 2016 as the restructuring failed. Ernst & Young (E&Y) was appointed as the forensic auditor by the lenders in April 2018 and they submitted their report on January 19. E&Y report was placed before the Fraud Identification Committee of 18 lenders in 2019. Fraud is mainly attributed to diversion of funds, misappropriation and criminal breach of trust.
Further, the shipyard bank fraud led to the discourse between Congress, BJP. The opposition Congress party questioned the government, ”why did it take five hrs after the liquidation proceedings of ABG Shipyard to lodge even an FIR for duping 28 banks for Rs 22842 crore?” and “why no criminal action has been taken despite their accounts having been declared fraud on June 19”, Surjewala asked.
In its statement, the SBI said fraud is declared on the basis of the forensic audit report findings that are discussed thoroughly in joint lenders meetings and when fraud is declared, an initial complaint is preferred with the CBI and based on its enquiries, further information is gathered. “In a few cases, when substantial additional information is gathered, a second complaint incorporating full and complete details is filed, which forms the basis for the FIR. At no point in time, there was an effort to delay the process. The lenders’ forum diligently follows through with CBI in all such cases,” it said.
Countering the allegations, BJP spokesperson and Rajya Sabha member Syed Zafar Islam said that for Congress to attack the government over the case is like a thief blaming the police for the crime. He said all these loans were given before 2014 and had turned non-performing assets (NPA) under the Congress-led UPA dispensation whose functionaries, the BJP leader alleged, were “hand in glove” with the promoters of the company.
Due process was followed all these years and the BJP government has identified the fraud, he said. “That is why we have taken this action,” he said, referring to the CBI case in the matter.
You can connect with Ground Report on Facebook, Twitter, Instagram, and Whatsapp and Subscribe to our YouTube channel. For suggestions and writeups mail us at GReport2018@gmail.com What is Shipyard Scam
ALSO READ: Who will be the next CM of Uttar Pradesh?