FM Nirmala Sitharaman said while normally it takes 52-56 months to detect bank frauds, lesser time was taken to take action under the Modi government.
Termed as India's 'biggest bank fraud' till date, ABG Shipyard, once India's largest private shipyard firm is in the news for all the wrong reasons. The sinking shipbuilding firm is now the new topic for a war of words between the ruling Bharatiya Janata Party and the main Opposition, the Congress party.
ABG Shipyard has been booked by the Central Bureau of Investigation (CBI) for defrauding 28 banks to the tune of over Rs 22,800 crores. The company which once supplied, repaired and built ships for the Indian Navy, Coastguard and many private ships nationally and globally, is now being probed for committing the biggest bank fraud in the history of India.
The fraud by this Gujarat-based firm makes Punjab National Bank scam and Vijay Mallya defrauding SBI led consortium look like peanuts. While diamond trader Nirav Modi and Mehul Choksi looted the PNB of over Rs 14,000 crore, Vijay Mallya allegedly defrauded Rs 9,990 crore from SBI led consortium.
Meanwhile, the Congress and the BJP are at loggerheads over the scam that has surfaced now. Hitting out at accusations made by Congress, Finance Minister Nirmala Sitharaman said that while normally it takes 52 to 56 months to detect such bank frauds, lesser time was taken to detect and take action under the present government.
What is the scam
Between 2012 and 2017, ABG Shipyard Ltd, a Gujarat-based firm, purportedly defrauded banks of Rs 22,842 crore total.
It came to light during a forensic audit by Ernst and Young in January 2019, for a period between April 2012 and July 2017.
In a novel way the company apparently created a web of transactions to cheat a consortium of 28 banks including SBI, IDBI and ICICI.
According to CBI sources, ABG Shipyard Ltd took loans from these banks and then diverted them.
It allegedly made investments in overseas subsidiaries from the loan amounts, bought assets in the names of affiliated companies.
CBI investigation also suggests the company ABG SL transferred money to several related parties.
Company whose account became Non-Performing Asset in 2013, violated terms of its arrangement for Corporate Debt Restructuring.
CDR is a relief mechanism in which lender banks either reduce the interest rates on the loans or increase the tenure of the repayment.
The loopholes in the case
The State Bank of India identified the fraud in January 2019, but filed a complaint only in November that year.
A more comprehensive complaint was filed in August 2020, but the CBI finally registered a case on February 7, 2022.
CBI registered a case and booked ABG Shipyard Ltd and ABG International Private Ltd under bank fraud this year.
Action taken so far
ABG SL's former Chairman and MD Rishi Kamlesh Agarwal and former executive director Santhanam Muthaswamy have been booked.
Directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevatia have also been booked by CBI.
Raids were conducted last Saturday at 13 premises in Surat, Bharuch, Mumbai, and Pune, leading to recovery of incriminating documents.
How much is the fraud amount
According to the FIR, ABG Shipyard Ltd now owes a total of Rs 22,842 crore to several banks in the country.
It owes ICICI (which was leading the consortium) Rs 7,089 crore, SBI Rs 2,925 crore, IDBI Bank Rs 3,639 crore.
It owes Bank of Baroda Rs 1,614 crore, Punjab National Bank Rs 1,244 crore, Exim Bank Rs 1,327 crore.
It also owes Indian Overseas Bank Rs 1,244 crore and Bank of India Rs 719 crore, among others.
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