Manas Dasgupta
NEW DELHI, Feb 13: The Congress has accused some high echelons in the Narendra Modi government at the centre of colluding with the bank fraudsters after questioning the undue delay in filling an FIR by the Central Bureau of Investigation (CBI) in the country’s “biggest bank fraud” involving Rs 22,842 crores and 28 banks.
Smelling something fishy in the entire episode, the Congress spokesman and general secretary Randeep Singh Surjewala on Sunday pointed out that the Gujarat-based ship building company involved in the fraud, ABG Shipyard, was shown special favours by the state government in land allocation at Dahej in Bharuch district in 2007 when Modi was the chief minister of Gujarat.
“The complicity, the collusion and the connivance of those sitting in the highest echelons of the Modi government with bank fraudsters is writ large,” Surjewala alleged. He said it was the “biggest bank fraud” witnessed by the country.
The ABG Shipyard, a major Gujarat-based ship-building company and its directors have been booked by CBI for fraudulent loan default to the tune of Rs 22,842 crore, making it one of the biggest loan fraud cases the agency is probing.
The agency has booked ABG Shipyard Ltd (ABGSL) and its former chairman and managing director, Rishi Kamlesh Agarwal, along with then executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia for allegedly cheating a consortium of banks led by the State Bank of India (SBI) of over Rs 22,842 crore.
Another company, ABG International Pvt Ltd, has also been booked in the case for alleged offences of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under IPC and Prevention of Corruption Act.
ABG Shipyard is alleged to have diverted loan funds through subsidiaries in Singapore and through other means between 2012 and 2017. The loan was declared NPA in July 2016, and the company is already facing proceedings in the National Company Law Tribunal (NCLT).
Surjewala questioned why it took the CBI to file the FIR five years after the liquidation proceedings of ABG Shipyard to lodge an FIR when all the accused have already escaped from the country for some foreign destinations. “Why did it take five years after the liquidation proceedings of ABG Shipyard to lodge even an FIR for duping 28 banks of Rs 22,842 crore?” Surjewala asked at a press conference on Sunday.
“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?” he asked.
Surjewala said the SBI wrote to the CBI in November 2018, pointing out the “fraud committed by ABG Shipyard and seeking the registration of an FIR and criminal action. Despite this, nothing happened and the CBI pushed the files back to the SBI. Public money keeps getting swindled, but no FIR is lodged.”
On August 25, 2020, the SBI filed a second complaint with the CBI, saying “please register an FIR as this is a case of cheating and fraud. But the CBI still does not act. It waits for another year and a half. Finally, now, after five years, this FIR has been registered”, he added.
Accusing the top Modi government officials of “complicity” with the fraudsters, Surjewala said there seemed to be a “loot-and-escape” scheme for bank fraudsters while pointing out many instances in the past and adding that the accused in these cases are now in foreign shores. He alleged that “these indelible facts reflect the gross mismanagement of the banking system, holding the banking system captive to fraudsters and the initiation of the loot-and-escape flagship scheme for bank fraudsters”.
“Over the last seven-and-a-half years of the Modi government, incidents of bank fraud involving a total amount of Rs 5.35 lakh crore have been reported. During this period, the write-offs by the banks in India is Rs 8.17 lakh crore.
“Bank NPAs amounted to Rs 21 lakh crore between 2014 and 2021. That is the state of gross mismanagement of people’s money, which is lying in the banking system,” the Congress leader said, adding, “India woke up to the rude shock of the biggest ever bank fraud in the last 75 years involving Rs 22,842 crore.”
He claimed that the ABG Shipyard was allotted 1.21 lakh square metres of land in 2007 by the then Gujarat government at a concessional rate of Rs 700 per square metre when the going market rate then was more than its double. “The comptroller and auditor general had indicted the then Gujarat government for undue favours to ABG Shipyard and Rishi Agarwal over allotting land at Rs 700 per square metre, while the price of the land was 100 per cent higher, that is Rs 1,400 per square metre,” Surjewala said. He said the then Gujarat government proceeded to allot 50 hectares of land to ABG Shipyard in Dahej.
The SBI had first filed a complaint on November 8, 2019 on which the CBI had sought some clarifications on March 12, 2020. The bank filed a fresh complaint in August 2020. After “scrutinising” the complaint for a year and a half, the CBI acted on the complaint, filing an FIR on February 7 this year.
In its complaint, the SBI said ABG Shipyard Limited (ABGSL) is the flagship company of the ABG Group, which is engaged in the business of ship building and ship repair.
The CBI filed the FIR on the basis of a 2019 complaint from the State Bank of India, one of the lenders. The CBI, which registered the case on February 7, carried out searches at 13 locations in premises of the accused on Saturday. These include premises linked with ABGSL and its directors in Surat, Bharuch, Mumbai and Pune, among other places.
“It was alleged that the accused had cheated the consortium of 28 banks, including branches of erstwhile State Bank of Patiala, Commercial Finance Branch, New Delhi; erstwhile State Bank of Travancore, Commercial Branch, New Delhi; State Bank of India, Overseas Branch, Mumbai etc. The consortium of 28 banks was led by ICICI Bank,” CBI said in a statement.
According to CBI, the Surat-based company was engaged in shipbuilding and ship repair. “It was alleged that the accused had colluded and committed activities by way of diversion of funds for the purpose other than for which the funds were released by the bank,” the agency stated. “Huge amounts were allegedly transferred by the said company to its related parties and subsequently adjustment entries were made.”
“It was alleged that bank loans to the said private company was diverted and huge investment was found to be made in the overseas subsidiary. It was alleged that funds from banks were diverted to purchase assets in the name of related parties,” it stated.
According to CBI, the ABG Group, which owns ABGSL, is a major player in the Indian shipbuilding industry. ABGSL’s shipyards are located at Dahej and Surat in Gujarat, and the company has capacity to build vessels up to 18,000 dead weight tonnage (DWT) at Surat Shipyard and 1,20,000 dead weight tonnage (DWT) at Dahej Shipyard, it stated.
ABGSL has constructed over 165 vessels, including 46 for export market, in the last 16 years. These include specialised vessels such as newsprint carriers, self-discharging and loading bulk cement carriers, floating cranes, interceptor boats, dynamic positioning diving support vessels, pusher tugs and flotilla for leading companies in India and abroad.
According to the complaint, the company was impacted by a global crisis in the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand. However, an audit of its financials revealed fraudulent practices, CBI has stated.
The FIR stated: “The Forensic Audit report dated 18.01.2019 submitted by M/s. Ernst & Young LLP 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 audit has cited several instances of circular transactions involving various subsidiaries, including one in Singapore, it stated. In one instance it has been noted that “based on the bank book and ledgers…funds amounting to INR 15 Crs and INR 16 Crs transferred to ABG Energy respectively by ABG SL. Further, on same days, funds amounting to INR 31 Crs (2 inflow transactions of INR 15 Crs and INR 16 Crs respectively) were received from ABG International in the form of refund of accommodation deposits. The above indicates that there may not be actual refund of accommodation deposits previously paid by ABG SL amounting to INR 31 crores and only potential circular transactions.”
“On review of bank book, it is noted that out of INR 300 crores, INR 95 crores might have been bought in via circular transaction in April 2014 as outflow to linked parties and inflow from ABG International on the same date,” the FIR said.