ED searches 26 locations linked to ABG Shipyard
The Enforcement Directorate (ED) on Tuesday carried out raids at 26 premises linked to ABG Shipyard Ltd, one of the largest private shipbuilding companies, accused of cheating a consortium of 28 banks to the tune of ₹22,842 crore, people familiar with the development said.
The raids, under the Prevention of Money Laundering Act (PMLA), were carried out at the premises of ABG Shipyard, its sister companies and executives in Mumbai, Pune and Surat to gather financial documents, bank account details and list of associated companies, officials with knowledge of the development said, requesting anonymity.
ED had registered a money laundering case in connection with the matter in February this year based on a first information report (FIR) filed by the Central Bureau of Investigation (CBI) in a probe initiated around the same time.
Preliminary investigation by CBI revealed that huge amounts taken from banks may have been diverted within India and abroad through over 100 shell companies.
CBI has accused ABG of cheating a consortium of 28 banks of ₹22,842 crore, with ICICI Bank having the highest exposure of ₹7,089 crore, followed by IDBI Bank ( ₹3,639 crore), State Bank of India ( ₹2,925 crore), Bank of Baroda ( ₹1,614 crore) and Punjab National Bank ( ₹1,244 crore).
Various banks of the consortium declared the account of ABG as “fraud” between April 2019 and March 2020.
Both, CBI and ED have named ABG’s former chairman and managing director Rishi Kamlesh Agrawal and other directors of the company as accused in their cases. Agrawal has already been questioned by CBI.
In a detailed statement in February, CBI said a majority of disbursements in ABG Shipyard’s account took place between 2005 and 2012, and the loan account turned into a non-performing asset (NPA) on November 30, 2013. The Congress-led United Progressive Alliance (UPA) was in power between 2004 and 2014.
CBI, too, raided ABG’s premises on February 12 in various cities, and located the CMD and directors of ABG Shipyard in India itself.
A forensic audit carried out by ED in 2018 revealed that between April 2012 and July 2017, the accused conspired and committed illegal activities including diversion of funds, misappropriation and criminal breach of trust.
The State Bank of India first filed a complaint with CBI on November 8, 2019 after which the agency sought some clarifications on March 12, 2020. The bank filed a fresh complaint in August that year. After “scrutinising” the complaint for over one-and-a-half years, CBI filed an FIR on February 7.
The central agency had also faced criticism for delaying the filing of FIR. A senior CBI officer, however, defended the delay, saying: “There are 28 banks involved in consortium with a huge amount of disbursement. There was different nature of bank loans including CC (cash credit) loan, term loan, letter of credit, and bank guarantee, etc. that were given as advance by the banks, and verification for all these documents takes time.”
CBI spokesperson RC Joshi had said in February that “the fraud is primarily on account of huge transfer by M/s ABG Shipyard to its related parties and subsequently making adjustment entries. It is also alleged that huge investment was made in its overseas subsidiary by diverting the bank loans and funds to purchase huge assets in the name of its related parties. During the perusal of records and initial investigation, it is seen that the critical period was 2005-2012”.