New Delhi: In the biggest bank fraud in the past 75 years, totalling Rs 22,842 crore in India, public sector State Bank of India (SBI) has refuted allegations of delay in filing the complaint against Gujarat-based ABG Shipyard with the Central Bureau of Investigation (CBI).
The CBI had filed a case against ABG Shipyard, the flagship company of the ABG Group which builds and repairs ships in Dahej and Surat, and its directors Rishi Agarwal, Santhanam Muthuswamy and Ashwini Kumar on Saturday for allegedly defrauding 28 banks of Rs 22,842 crore.
According to the SBI complaint, ABG Shipyard owes it Rs 2,925 crore, Rs 7,089 crore to ICICI Bank, Rs 3,634 crore to IDBI Bank, Rs 1,614 crore to Bank of Baroda, Rs 1,244 to PNB and Rs 1,228 crore to IOB, a first information report (FIR) registered by the CBI said adding, “the money was used for purposes other than the purpose for which the funds were released by the Bank”.
“The forensic audit report dated 18.01.2019 and submitted by M/s Ernst & Young LP for the period April 2012 to July 2017 revealed that the accused have colluded together and committed illegal activities, including diversion of funds, misappropriation and criminal breach of trust and for purposes other than for the purpose for which the funds are released by the bank,” the FIR stated.
In a statement issued on Sunday, SBI said that it had filed a complaint against ABG Shipyard with the CBI way back on November 8, 2019. After the CBI sought some clarifications
on March 12, 2020, the bank filed a second complaint in August that year. According to the CBI, the agency acted on the complaint after “scrutinising” it for more than one-and-a-half years by filing an FIR on February 7.
SBI issued the statement after All India Congress Committee general secretary Randeep Surjewala accused the Narendra Modi government of running a “loot and escape” flagship scheme for bank fraudsters. During a press conference in Chandigarh on Sunday, he alleged that no FIR was registered despite the initiation of the liquidation of ABG Shipyard starting on August 1, 2017. The Congress had conducted a press conference on February 15, 2018, warning about the scam but no action was taken, he further alleged.
“Why did the Modi government refuse to take note of the allegations made on February 15, 2018, by the Congress, warning of a scam in ABG Shipyard, and why no FIR was lodged and criminal action taken despite their accounts having been declared as fraud on June 19, 2019?” Surjewala asked.
SBI said that after the company was “financed under consortium arrangement with over two dozen lenders led by ICICI Bank”, the “account became a non-performing asset (NPA) in November 2013 due to poor performance”.
“Several efforts were made to revive company operations but couldn’t succeed. The account was restructured under the CDR mechanism in March 2014 by all lenders. However, as the shipping industry was going through a downturn, one of the worst ever seen, the operations of the company could not be revived,” the bank said.
As per the country’s largest public-sector lender, the “account was classified as NPA in July 2016 with effect from November 2013” as restructuring failed. “E&Y were appointed as the forensic auditor by the lenders in April 2018. Fraud is mainly attributed to diversion of funds, misappropriation and criminal breach of trust,” the statement read.
“The first complaint was filed with the CBI in November 2019. There was a continuous engagement between the CBI and the banks,” SBI said adding, “in a few cases, when substantial additional information is gathered, a second complaint is lodged”.
Adding that “at no point in time was there any effort to delay the process”, SBI said, “The account is currently undergoing liquidation under an NCLT driven process.” Swaminathan J, MD (risk compliance and stress assets resolution group), SBI, said, “We will aim to recover as much as possible. Such cases have been fully provided for. So, there will be no impact on the balance sheet of any of the banks or profit/loss accounts.”