New Delhi: The sinking shipbuilding company is behind what is being described as “the biggest bank fraud” of India.
BETWEEN 2012 and 2017, ABG Shipyard Ltd (ABG SL), a Gujarat-based company, which is said to deceive a bank of RS 22,842 Crore. This revelation has caused the Government of Narendra Modi to be under fire, with the opposition congress accusing him to help in “booty”, given that fraud occurred in the country ruled by BJP.
The scope and scale of the alleged fraud is very surprising, but the core of fraud, because the Central Investigation Bureau (CBI) is found, is a new way in which the company seems to create a web transaction to deceive the Consortium of 28 Banks including Bank State of India (SBI), IDBI and ICICI .
According to the CBI source, ABG SL took a loan from these banks and then transferred them. It was allegedly investing in foreign subsidiaries from the loan amount, buying assets in the names of affiliated companies, and also transferred money to several relevant parties.
Also alleged that the company, whose account becomes non-performing assets (NPA) in 2013, violates its regulatory provisions for corporate debt restructuring (CDR) – aid mechanism where lenders can reduce loan interest rates on loans. or increase payment term.
Brouhaha around this problem has been exacerbated by the fact that this case seems to have been hit by a delay. SBI identified fraud in January 2019, but filed a complaint only in November that year. Fresh and more comprehensive complaints were submitted in August 2020, but the CBI finally registered the only case on February 7, and ordered ABG SL and ABG International Private Ltd.
The investigation body has also ordered the former Chair and Managing Director of ABG SL Rishi Kamlesh Agarwal, former Executive Director of Santhanam Muthaswamy, and the Directors of Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevatia. The search was also conducted last Saturday in 13 places accused of letter, Bharuch, Mumbai and Pune, which led to burdensome recovery documents, said source.
This case has caused a storm of a question: How did the fraud not detected for so long? How was the money diverted? How was the fraud revealed? What causes the postponement of registration by CBI?
A forensic audit blew the cover
Fraud allegedly revealed during the Forensic Audit Ernst and Young LLP (also known as EY) was carried out in January 2019, for a period of time between April 2012 and July 2017. Audit found that fraud had occurred during this period, according to FIR, a copy that has been Accessed by Thecrint.
The findings of the audit report, details accessed by Thecrint, showed that fraud was carried out through the “transfer of funds, abuse, and criminal violations of trust, with the aim of getting illegally with the cost of bank funds,” The SBI said in his complaint.
Loan money given to related parties, invested overseas
SBI complaints noted that ABG SL directed loan money by paying for related parties.
Forensic Audit – which is based on a ledger from one Ocean Private Shipping (OOSPL) and ABG engineering and construction (ABG EC) Ltd – noted that money was transferred to another company called Shipping PFS India Ltd. Allegedly adjusted to the accounts receivable to ABG SL.
“The transfer entity shows that in previous years ABG SL has transferred funds to the OSPL and ABG EC,” said FIR.
According to a source in the CBI, the money borrowed from the bank is used to repay loans and pay other fees from group companies, as well as for credit letters.
In addition, according to the Master Restructuring Agreement (MRA), ABG SL should have restored RS 236 Crore investment made by its subsidiary of Singapore’s Shipyard in the Standard Chartered Trust unit in two months from the date of the company’s debt reconstruction. Instead, ABG SL allegedly invested US $ 43 million in Singapore ABG, which later “has the potential to be transferred”.
“The company has been looking for permission to invest in subsidiaries abroad, which is a general business practice. But large pieces are directed back for other purposes, besides what is stated,” the CBI source said above. “Money, guess, diverted for tax havens.”