How ABG Shipyard pulled off ‘India’s biggest bank fraud’

Claimed to be the biggest bank fraud in history, the CBI has booked ABG Shipyard Ltd and its Ex-Chairman and Managing Director Rishi Kamlesh Agarwal and a few others for allegedly cheating a consortium of 28 banks led by State Bank of India and ICICI Bank.

According to the FIR filed on SBI’s complaint, a forensic audit led by Ernst & Young uncovered that from April 2012 to June 2017, loans given to the organization were redirected and were additionally used for purchasing assets for its related parties. In addition, the organization allegedly also invested a portion of these loans in its overseas subsidiary.
SBI filed a new FIR in September 2020, informing the CBI that staff responsibility had been managed and shut by the higher authority. It was observed that its staff was not associated with the supposed fraud.

Other than Agarwal, the agency has also named the former Executive Director Santhanam Muthaswamy, Directors Sushil Kumar Agarwal, Ashwini Kumar and Ravi Vimal Nevetia, and one more organization, ABG International Pvt Ltd, for supposed offences of the criminal scheme, cheating, criminal breach of trust and abuse of official position under the IPC and Prevention of Corruption Act.

According to the FIR, a copy of which is with ThePrint, ABG SL now owes a total of Rs 22,842 crore. Out of this amount, it owes ICICI (which was leading the consortium) Rs 7,089 crore, SBI Rs 2,925 crore, IDBI Bank Rs 3,639 crore, Bank of Baroda Rs 1,614 crore, Punjab National Bank Rs 1,244 crore, Exim Bank Rs 1,327, Indian Overseas Bank Rs 1,244 crore, and Bank of India Rs 719 crore, among others.

Sources in the CBI said that while the loans were given to the company by these banks between 2005 and 2010, the fraud was detected only after the forensic audit. The SBI in its complaint said that the fraud occurred between 2011 and 2017.

“From the initial investigation it appears that the loans were sanctioned between 2005 and 2010. It appears that the money was given out without due diligence from the banks. The fraud amount under investigation could be more or less than what from what is reflected right now,” said a CBI source.

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