In India’s Biggest Loan Scam, ABG Shipyard’s Ex-Chairman Questioned: Sources

Former chairman of ABG Shipyard Rishi Agarwal has been questioned in connection by the Central Bureau of Investigation in connection with the ₹ 22,842 crore bank scam, said to the country’s biggest.

Sources said the agency searched his house on Saturday after which summons were issued and he was questioned this week.

The agency is investigating ABG Shipyard Ltd and its former directors Rishi Agarwal, Santhanam Muthuswamy, and Ashwini Kumar, who have been accused of cheating 28 banks out of ₹ 22,842 crore.

According to a complaint by the State Bank of India, the company owes ₹ 2,925 crore to the bank, ₹ 7,089 crore to ICICI Bank, ₹ 3,634 crore to IDBI Bank, ₹ 1,614 crore to Bank of Baroda, ₹ 1,244 to PNB and ₹ 1,228 crore to IOB. The funds were used for purposes other than for which they were released by banks, the CBI said.

Yesterday, a money laundering investigation was started against them by the Enforcement Department, in connection with the fraud case.

The CBI has alleged that the former promoters had diverted the loans to 98 related companies. The ED will look into the alleged “diversion”, creation of shell firms to launder the public money and the role of the company executives, sources said.

The Gujarat-based ABG Shipyard — once a key player in shipbuilding and ship repair — is the flagship company of the ABG Group. Its shipyards — located in Gujarat’s Dahej and Surat — have built over 165 vessels in the last 16 years. Forty-six of these ships were for export.

The alleged fraud was detected in 2019 during a forensic audit by Ernst and Young LLP.

In his complaint, the State Bank said the global downturn in economy and the shipbuilding sector had set off the crisis, reported news agency Press Trust of India. It had “impacted the shipping industry due to fall in commodity demand and prices and subsequent fall in cargo demand”.

“The cancellation of contracts for few ships and vessels resulted in piling up of inventory. This has resulted in paucity of working capital and caused significant increase in the operating cycle, thereby aggravating the liquidity problem and financial problem,” the complaint read, reported PTI.