ABG Shipyard: CBI Issues Look Out Notices Against Former ABG Shipyard CMD and Eight others

The CBI announced on Tuesday that Rishi Kamlesh Agarwal, the former chairman and managing director of ABG Shipyard, and eight others had been issued lookout notices in a bank fraud case involving over Rs 22,842 crore.

The Central Bureau of Investigation (CBI) has already issued Look Out Circulars (LOCs) against the accused, according to the statement, and the accused have been located in India.

Officials claimed the lookout alerts were issued to keep them from fleeing the country.

In 2019, the State Bank of India (SBI) opened a line of credit (LOC) against the main accused.

ABG Shipyard Ltd, its then chairman and managing director Rishi Kamlesh Agarwal, and others have been charged by the CBI with defrauding a consortium of banks of over Rs 22,842 crore.

The former executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevetia, as well as another company ABG International Pvt Ltd, have been charged with criminal conspiracy, cheating, criminal breach of trust, and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act, according to the agency.

On February 12, the CBI conducted searches at 13 locations as part of the ongoing investigation. Officials stated they had received various incriminating documents, including the alleged borrower’s books of accounts, which were being examined.

On November 8, 2019, the bank filed a complaint, and on March 12, 2020, the central investigation agency requested clarifications.

In August of that year, the bank filed a new case. The CBI acted on the complaint after “scrutinizing” it for almost a year and a half, registering a FIR on February 7, 2022.

They said the company received financing from 28 banks and financial institutions, led by ICICI Bank, with the SBI having a Rs 2,468.51 crore exposure.

According to a forensic audit conducted by Ernst and Young, the accused conspired and undertook illicit acts between 2012 and 2017, including money laundering, misappropriation, and criminal breach of trust.

It is the CBI’s largest bank fraud case to date. It claimed that funds were used for reasons other than those for which banks had released them.

In July 2016, the loan account was designated a non-performing asset (NPA) and a fraud in 2019.

The SBI said in its complaint that ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group, which is involved in shipbuilding and ship repair.

The ABGSL is a key operator in the Indian shipbuilding sector, with shipyards in Dahej and Surat, Gujarat, capable of producing boats up to 18,000 dead weight tonnes (DWT) at Surat Shipyard and 1,20,000 dead weight tonnes (DWT) at Dahej Shipyard.

In the last 16 years, the business has built approximately 165 vessels (including 46 for export), including specialized vessels such as newspaper carriers. The lawsuit stated that self-discharging and loading bulk cement carriers, floating cranes, and other vessels have received class approval from all international classification organizations such as Lloyds, American Bureau of Shipping, Bureau Veritas, IRS, and DNV.

“The shipping industry has been damaged by the global crisis, which has resulted in a drop in commodities demand and prices, as well as a drop in cargo demand. The cancellation of a few contracts for ships and boats resulted in inventory piling up. This has resulted in a shortage of working capital and a significant lengthening of the operational cycle, exacerbating the liquidity and financial issues “According to the lawsuit,

The SBI stated that there was no demand for commercial vessels because the industry was in decline already in 2015, which was exacerbated by a lack of defence orders, making it difficult for the company to keep its payback schedule.

“ICICI Bank has submitted the business to NCLT, Ahmedabad, for CIRP,” it said.

Source: The Economic Times