Gujarat shipbuilding firm charged with defrauding Rs 22,000 crore loan: CBI

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A major Gujarat-based shipbuilding firm and its directors have been charged by CBI with fraudulent default of Rs 22,842 crore, making it one of the biggest loan fraud cases the agency has ever seen. investigation.

The agency has booked ABG Shipyard Ltd (ABGSL) and its former Chairman and Managing Director, Rishi Kamlesh Agarwal, along with then Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia.

Another company, ABG International Pvt Ltd, has also been indicted in the case for alleged offenses of criminal association, cheating, criminal breach of trust and abuse of official position under the IPC and the Prevention of Corruption Act.

ABG Shipyard allegedly misappropriated loan funds through subsidiaries in Singapore and other means between 2012 and 2017. The loan was declared NPA in July 2016 and the company is already the subject of proceedings before the National Company Law Tribunal (NCLT).

The FIR was registered based on a 2019 complaint from State Bank of India, one of the lenders.

The CBI, which registered the case on February 7, carried out searches on Saturday at 13 locations at the defendant’s premises. These include premises linked to ABGSL and its administrators in Surat, Bharuch, Mumbai and Pune, among others.

“The defendant was alleged to have deceived the consortium of 28 banks, including branches of the former State Bank of Patiala, Commercial Finance Branch, New Delhi; former State Bank of Travancore, Commercial Branch, New Delhi; State Bank of India, Overseas Branch, Mumbai, etc. The consortium of 28 banks was led by ICICI Bank,” CBI said in a statement.

According to CBI, the Surat-based company was engaged in shipbuilding and ship repair.

“It was alleged that the defendant colluded and engaged in embezzlement for purposes other than those for which the funds were released by the bank,” the agency said. “Huge amounts were allegedly transferred by said company to its related parties and subsequently adjusting entries were made.”

“It has been alleged that bank loans to the said private company have been misappropriated and huge investments have been made in the overseas subsidiary. It has been alleged that funds from banks have been misappropriated to purchase assets on behalf of related parties,” he said.

According to CBI, ABG Group, owner of ABGSL, is a major player in the Indian shipbuilding industry. ABGSL’s shipyards are located at Dahej and Surat in Gujarat, and the company has the capacity to build vessels up to 18,000 tons deadweight (DWT) at Surat shipyard and 1,20,000 tons at dead weight (DWT) at the Dahej shipyard, he said.

ABGSL has built over 165 vessels, including 46 for the export market, over the past 16 years. These include specialized vessels such as newsprint carriers, self-unloading and self-loading bulk cement carriers, floating cranes, interceptor boats, dynamically positioned diving support vessels, pusher tugs and fleets for leading companies in India and abroad.

According to the complaint, the company has been affected by a global crisis in the shipping industry due to the decline in demand and prices for raw materials and the subsequent decline in demand for freight. However, an audit of its finances revealed fraudulent practices, CBI said.

The FIR said: “The forensic audit report of 18.01.2019 submitted by M/s. Ernst & Young LLP for the period April 2012 to July 2017 revealed that the defendants colluded and engaged in unlawful activities, including embezzlement, embezzlement and breach of trust criminal and for purposes other than those for which the funds are released by the Bank.”

The audit cited several cases of circular transactions involving various subsidiaries, including one in Singapore, he said.

In one instance, it was noted that “based on bank book and records… funds amounting to INR 15 Crs and INR 16 Crs transferred to ABG Energy respectively by ABG SL. funds amounting to INR 31 Crs (2 incoming transactions of INR 15 Crs and INR 16 Crs respectively) have been received from ABG International in the form of reimbursement of accommodation deposits The above indicates that there may not be effective refund credit for accommodation deposits previously paid by ABG SL amounting to INR 31 crore and only potential circular transactions.

“In reviewing the bank book, it is noted that out of INR 300 crore, INR 95 crore may have been purchased through a circular transaction in April 2014 as an outflow to related parties and an inflow of ABG International to the same date,” the report said. noted.

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