ED seizes assets worth ₹2,747 cr in India's biggest bank fraud case

The Enforcement Directorate on Thursday attached assets worth ₹2,747.69 crore in the ₹22,842 crore fraud by Gujarat-based ABG Shipyard.

The attached assets include two shipyards located in Surat and Dahej, agricultural lands and plots, various commercial and residential premises in Gujarat and Maharashtra and bank accounts owned by ABG Shipyard, its group companies and other related entities.

The probe agency had initiated a money laundering investigation on the basis of an FIR registered in February 2022 by the Central Bureau of Investigation (CBI) against ABG Shipyard and others.

The investigation by ED revealed that ABG Shipyard and its chairman and managing director Rishi Kamlesh Agarwal availed various credit facilities and loans from consortium of banks led by ICICI Bank on pretext of meeting its capital requirements and other business expenses but ABG Shipyard misappropriated the credit facilities availed from the consortium and diverted the funds for the purposes other than its actual cause in the garb of loans to various related entities incorporated in India and abroad, that eventually caused monetary loss to the tune of ₹22,842 crore to the consortium of lenders.

The probe agency has traced movable and immovable assets worth ₹2,747.69 crore belonging to ABG Shipyard, its group companies, Bermaco Energy Systems, Dhananjay Datar, Savita Dhananjay Datar, Krishna Gopal Toshniwal, Viren Ahuja and attached them under the provisions of Prevention of Money Laundering Act (PMLA), 2002.

Although, ICICI Bank was the lead lender in the consortium and IDBI was the second lead, it was preferred that SBI being the largest PSB lender, lodges the complaint with CBI.

ABG Shipyard had been in business with the State Bank of India (SBI) since 2001. However, the account turned NPA on November 30, 2013, leading to bad loans worth ₹22,842 crore. The majority of disbursement happened between 2005 and 2012 by a consortium of 28 banks led by ICICI Bank, and which included SBI.

The account was restructured under the corporate debt restructuring (CDR) mechanism on March 27, 2014, but the operations of the company could not be revived.

On September 10, 2014, N V Dand & Associates was deputed to conduct a stock audit of ABG Shipyard. It submitted the audit report in the matter on April 20, 2016, which listed several discrepancies on part of the company. Subsequently, the account of ABG Shipyard was declared NPA on July 30, 2016, with effect from November 30, 2013.

In accordance with a policy implemented since 2014 of red-flagging suspect accounts, commissioning forensic audits by empanelled forensic auditors, and making CMDs liable, a forensic audit was initiated based on the lenders’ decision in the joint lenders meeting dated April 10, 2018.

Following this decision, Ernst & Young was roped in as forensic auditor to look into the case. 

Meanwhile, ICICI Bank, the lead bank of the lending consortium to ABG Shipping, took the company to Ahmedabad bench of National Company Law Tribunal on August 1, 2017, for Corporate Insolvency Resolution Process (CIRP). Between April 2019 and March 2020, various banks of the consortium declared the account of ABG Shipyard as fraud.