On Wednesday, investigators from Central Bureau of Investigation (CBI) stopped Rishi Kamlesh Agarwalfounder and chairman of ABG Shipyard Limited, for allegedly executing a bank fraud of over Rs 22,842 crores.
In February this year, the central investigation agency filed a complaint against him and a few others, and within days of filing the complaint, they conducted searches in 13 locations.
Under the Indian Penal Code (IPC) and the Prevention of Corruption Act, the CBI charged Agarwal and others with criminal conspiracy, cheating and criminal breach of trust. The State Bank of India (SBI) filed the complaint that led to this case.
In a February statement, the CBI said ABG Shipyard Ltd. had been doing business with SBI since 2001. group of 28 banks led by ICICI Bank and SBI.
However, a forensic examination conducted by Ernst & Young in 2018 led to several banks declaring the account fraudulent between April 2019 and March 2020. According to the CBI, the fraud was mainly caused by a massive transfer from the company to some of the accused.
It was also alleged that bank loans had been redirected to its overseas subsidiary to fund the massive expansion. The investigative agency said funds had been diverted to buy massive assets.
The Founding President, Santhanam Muthaswamy, along with directors Sushil Kumar Agarwal, Ashwini Kumar and Ravi Vimal Nevetia, were all booked by the central agency. Under the Indian Penal Code and the Prevention of Corruption Act, they were charged with criminal conspiracy, cheating and criminal breach of trust.
A lookout notice was issued against Agarwal and eight others earlier this year.
Chronology of fraud for the ABG shipyard:
1985 – The ABG Group’s flagship company, ABG Shipyard Ltd, is founded. Founded by Rishi Agarwal, it operates shipyards in Dahesh and Surat, Gujarat, and engages in shipbuilding and ship repair. The consortium of 28 banks financed the company, with ICICI serving as the lead bank.
2005-2010 – ABG Shipyards continues to receive large loans from banks despite warning signs in 2008 of a global economic crisis.
2008 – ABG Shipyards is impacted by the global financial crisis, triggered by the US housing bubble and the bankruptcy of Lehman Brothers. The lack of working capital led to a “substantial increase in the operating cycle”, which only exacerbated the company’s liquidity and funding problems.
March 2014 – Loans to ABG Shipyard are being restructured by the SBI via corporate debt restructuring (CDR). The reorganization failed because ABG Shipyards cannot pay interest and installments when they are due.
July 2016 – The ABG account is declared NPA immediately on November 30, 2013.
August 2017- The company was placed on the RBI’s “dozen” list of 12 massive non-performing assets (NPAs), which also included Essar, Bhushan, Jaypee and Amtek.
The first bank ICICI Bank, filed an IBC claim with total claims of 27,400 crore payable to banks, government, workers and operational creditors.
January 2019 – SBI uncovers a scam.
January 2019 – Ernst and Young LLP conducted a forensic audit of the ABG shipyard. Evidence of fraud between April 2012 and July 2017 is discovered. The audit reveals that the fraud was committed by “embezzlement, embezzlement and criminal breach of trust” with the intent to illegally gain at the expense of the bank.
There were a total of 28 banks involved in the loan program that ABG Shipyard used to finance its operations. The money from these loans was redistributed to 98 sister companies, where it was mainly used to finance the purchase of personal assets.
November 2019 – SBI filed the complaint.
August 2020 – SBI submits an updated formal complaint.
February 7, 2022 – The CBI has opened an investigation into the activities of ABG Shipyard and ABG International Private Ltd.
According to the CBI FIR, ABG SL has a debt of almost 22,842 crores. It has a total debt of 7,089 crore to ICICI, the leader of the consortium; 2,925 crores at SBI; 3,639 crore to IDBI Bank; 1,614 crores at Bank of Baroda; 1,244 crore to National Bank of Punjab; 1,327 crore to Exim Bank; 1,244 crores to Exim Bank; 719 crores at Exim Bank; 1,244 crores to Exim Bank;
February 15, 2022 – CBI press releasesed watch notice against Agarwal and ABG executives Santhanam Muthuswamy and Ashwini Kumar.
ABG Shipyard’s services include building and maintaining ships. Agarwal Shipyards is a key player in the industry it helped launch, with facilities at Dahej and Surat, Gujarat. The Surat Shipyard can build ships with a deadweight tonnage of up to 18,000 tons, and the Dahej facility can build ships with a deadweight tonnage of up to 1.20 million tons.
Over the past 16 years, the company has built over 165 vessels, 46 of which were destined for international markets. According to the FIR, the shipping industry has been damaged by the global crisis due to a drop in demand and prices for raw materials, which has led to a drop in demand for freight.
The cancellation of contracts for a small number of vessels/vessels has resulted in an accumulation of excess supplies. The company’s liquidity/financial difficulties were compounded by the scenario as a whole.
Same in 2015, the commercial shipping industry was in crisis, so there was no need for new ships. In addition, no new defense orders were issued that year.