ED Uncovers The biggest Bank Fraud In The History Of India

Date:

Multiple searches are being conducted by the Enforcement Directorate at over two dozen premises linked to ABG shipyard in connection to what might be India’s biggest bank fraud case to date.

The ED   raided the Mumbai, Pune, and Surat premises of ABG Shipyard Limited as well as its executives

What is ABG Shipyard? 

ABG Shipyard is one of India’s largest private sector shipyard firms According to sources; raids are underway in over 26 premises under the criminal sections of the Prevention of Money Laundering Act (PMLA) 

 The group of companies promoted by Rishi Agarwal is one of the major players in the Indian shipbuilding industry. The company can build vessels of up to 18,000 DWT (Dead Weight Tonnage) at its Surat shipyard and of up to 1,20,000 DWT at its Dahej shipyard.

In the last 16 years, the establishment has constructed over 165 containers which include many export vessels as well.

The company is also known to manufacture specialized vessels like floating cranes, newsprint carriers, self-discharge, and loading cement carriers, dynamic positioning diving support vessels, flotilla, and tugs for companies both in India as well as one’s located overseas.  

How did the raid take place? 

 A money laundering case has been registered against the firm after studying a complaint filed by the SBI. At present, ED is probing the company for allegedly defrauding banks of Rs22, 842.

The case of the agency is based on the offense registered by the Central Bureau of Investigation (CBI) in the matter.

In its complaint, SBI has also named the then executive directors and promoters for alleged offenses of criminal conspiracy, cheating, and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act.  

In addition to various premises of the firm, the premises of the then directors Santhanam Muthusamy, Rishi Agarwal, and Ashwini Kumar are also being thoroughly searched. According to close sources of the ED, this case is one of the biggest bank frauds that the ED has ever investigated.  

 What do the official reports say?

As per the FIR (First Information Report) filed by the State Bank of India (SBI), the audit report of all the accused revealed that all of them were in cahoots with each other from April 2012 to July 2017.

They conspired and committed an array of illegal activities such as diversion of funds, misappropriation, and criminal breach of trust.  

Sources have asserted that the company mainly availed 3 types of loans from 28 different banks including Oriental Bank of Commerce (OBC), Syndicate Bank, Dena Bank, Laxmi Vilas Bank, and Andhra Bank.

Probes into the fraud have also revealed that at least 98 companies were floated by ABG Shipyard Ltd (ABGSL) to divert a huge amount of funds which were then utilized to create ever-greening loans and personal assets.

According to statements made by the CBI during a press release, the fraud is pre-dominantly based on huge transfers made by ABG Shipyard Ltd to its parties and subsequent adjustment entries made to layer the transfers.  

Many officials consider the scam to be a very complex one, for it involves circular transactions and the use of shell companies to envelope them. A comprehensive search has also revealed that properties worth Rs83 crores were purchased out of security deposits provided by ABGSL between 2007 and 2009.   

The case has been going on since February 2022, when the CBI released a detailed statement that the majority of expenditures that took place from ABG Shipyard’s account were made between 2005 and 2012 after which the loan account turned into a non-performing asset.  

Published By : Sachin Sonawane

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