Image Courtesy:economictimes.indiatimes.com
In what has been dubbed the “biggest bank fraud”, Gujarat-based ship building company ABG Shipyard allegedly cheated a consortium of 28 banks to the tune of ₹ 22,842 crore, as per a statement released by the Central Bureau of Investigation (CBI). The matter has taken a serious political turn as the Congress Party alleged the role of the Bharatiya Janata Party ( BJP) led government in the case.
On February 12, 2022, the CBI registered a case against the private company and its directors Rishi Kamlesh Agarwal and others following a complaint from the State Bank of India (SBI). According to the complaint, ABG cheated the consortium led by ICICI bank and 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, among others.
The company, engaged in shipbuilding and ship repair, allegedly committed fraud by way of diverting large amount of funds to its related parties for purposes other than originally intended for the funds, as per the bank. Subsequently adjustment entries were made, said the CBI statement. SBI alleged that the bank loans were diverted for huge investment in the overseas subsidiary to purchase huge assets in the name of its related parties.
“Searches were conducted on Saturday at 13 locations in the premises of accused including private company, Directors at Surat, Bharuch, Mumbai, Pune etc which led to recovery of incriminating documents,” said the CBI.
Reacting to this news, Congress General Secretary Randeep Surjewala called a press conference on February 13 to demand an explanation for the delay in lodging an FIR against the company even though the liquidation proceeding against ABG shipyard was initiated in 2017. He stressed that the Congress party held a press conference warning the central government of the company being a potential scam on February 15, 2018, and asked, “Why did the Modi-government refuse to take note of the public allegations made in writing by congress?”
After the ABG loan/bank account being declared a “fraud” on June 19, 2019, the SBI wrote to the CBI on November 8 of the same year requesting action against the ABG and Agrawal. Sujrewala alleged that from then the CBI and SBI continued to “push the file back and forth” while the “fraudster” got the leisure time to loot the bank.
In response, the SBI issued a statement on Sunday stating that the bank was in continuous engagement and exchanging information with the CBI and other banks. It said that a fraud is declared on the basis of the Forensic Audit report findings that are discussed in joint lender meetings. When such a declaration is made, an initial report is sent to the SBI and more information is sent based on their enquiries.
“In a few cases, when substantial additional information is gathered, a second complaint incorporating full and complete details is filed which forms basis for the FIR,” said the SBI emphasising that there was no effort to delay the process.
Still, Sujrewala argued that the five year delay in action indicates 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.” He further said that in the last seven and half years, bank frauds worth ₹ 5,35,000 cr took place between 2014 and 2021, write-offs by banks in India amount to ₹ 8,17,000 cr in the same period, and bank Non Performing Asset (NPA) stood at ₹ 21,00,000 cr.
Alleging connection between the BJP and the ABG Shipyard, Sujrewala said that Chief Minister Narendra Modi in 2007 gave 1,21,000 sqm of industrial estate in Surat to the company. A Comptroller and Auditor General (CAG) report regarding the matter also said that the ABG was allocated land at ₹ 700 per sqm when the land price was 100 percent higher. Despite this, Modi gave 50 hectares of government-acquired land of the Dahej port to the shipping company under a Special Economic Zone (SEZ).
Meanwhile, the BJP retaliated to the Opposition’s allegations stating that these loans were sanctioned when the UPA was in power whereas the Modi government has gone after promoters behind such frauds. Finance Minister Nirmala Sitharaman said that the account had turned into a non-performing asset (NPA) in November 2013 while the UPA was in power.
“[To] the noises that are coming that ‘Oh, this is the biggest scam in Prime Minister Modi’s time! Not at all! This was a loan given well prior to 2013, it had even become an NPA by 2013,” said Sitharaman addressing the Reserve Bank of India (RBI) board on February 14.
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