CBI on how the ABG Shipyard fraud unfolded

ABG Shipyard Limited's (ABGSL) defrauding of Rs 22,842 crore is nothing short of a nightmare for its lenders. The shipyard was found to have defrauded 28 banks of an amount that is significantly higher than the Rs 12,000-crore scam by diamond trader Nirav Modi and Mehul Choksi.  

The Central Bureau of Investigation (CBI) has issued look out circulars for the prime accused, including the then chairman and managing director Rishi Kamlesh Agarwal, in the fraud case. “The fraud is primarily on account of huge transfers by M/S ABG Shipyard Ltd to its related parties and subsequently making adjustment entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting bank loans. The critical period of the investigation is 2005-2012,” the agency said in a statement. 

Banks like ICICI have been defrauded to the tune of Rs 7,089 crore, while it owes IDBI Bank as much as Rs 3,639 crore. ABG defrauded SBI of Rs 2,925 crore, Bank of Baroda of Rs 1,614 crore, Exim Bank of Rs 1,327 crore, Punjab National Bank of Rs 1,244 crore, Indian Overseas Bank of Rs 1,244 crore and Bank of India of Rs 719 crore. 

The agency also etched out how the discovery of the fraud case unfolded. Here’s a brief timeline of the ABG Shipyard fraud, as per the CBI:

ABG Shipyard has been in business with the SBI since 2001. Its account turned NPA on November 30, 2013. According to the bank, the NPA is of Rs 22,842 crore (approx) and the disbursement happened between 2005 and 2012 through 28 banks, including ICICI and SBI. 

On March 27, 2014, the account was restructured. However, the operations of the company could not be revived. 

On September 10, 2014, accounting firm NV Dand & Associates was enlisted to conduct a shock audit of ABG Shipyard. 

The firm sent in its audit report on April 30, 2016, where it mentioned various faults of the accused company. 

On July 30, 2016, the account of ABG Shipyard was declared NPA with effect from November 30, 2013.

The lenders decided to initiate a forensic audit in the Joint Lenders Meeting dated April 10, 2018. Ernst & Young LLP was appointed as the forensic auditor.

Since forensic audits also cover a period of three to four years prior to the date of declaration of NPA (in this case 2016), the forensic audit covered the period of 2012 to 2017. 

ABGSL was also referred to the National Company Law Tribunal (NCLT) on August 1, 2017 by ICICI Bank for the Corporate Insolvency Resolution Process (CIRP).

Following this, multiple banks – from April 2019 to March 2020 – declared the account of the company as fraud.  

The CBI further said that the perusal of records and initial investigation showed that the critical period was from 2005 to 2012.  

SBI made its complaint to CBI on August 25, 2020 to look into the matter, after the agency had raised queries in the complaint made in 2019. 

An FIR was registered on February 2, 2022, following an analysis of the basic facts, scrutiny, and discreet verification of the issues mentioned in the complaint. 

Thirteen locations were searched on February 12, 2022, which led to the discovery of several incriminating documents. 

The CBI said that it is in talks with the consortium to provide details including documents with regard to sanction of loan and its disbursal.

Also read: ABG Shipyard: How it plunged into debt and defrauded 28 banks of Rs 22,842 cr

Also read: ABG Shipyard Scam: Key players under CBI scanner