CBI quizzes ABG Shipyard’s Rishi Agarwal on Rs 22,800-crore loan default

Sources said Agarwal was confronted with evidence provided by SBI and other lenders. “He may be called for questioning again. Other accused in the case will also be questioned in due course,” a CBI official said.

The agency on February 7 booked ABG Shipyard Ltd and Agarwal along with its then executive director, Santhanam Muthaswamy; and directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia; and another company, ABG International Pvt Ltd, on charges of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the Indian Penal Code and the Prevention of Corruption Act.

Parallelly, the Enforcement Directorate has initiated a money-laundering probe against the company and its directors, and is likely to summon them for questioning.

On February 12, the CBI searched 13 locations and claimed to have recovered incriminating evidence such as account books, purchase or sales details, minutes of board meetings, share registers and contract files. The company is alleged to have diverted loans through subsidiaries in Singapore and by other means between 2012 and 2017. The FIR has been registered based on a 2019 complaint from SBI.

The CBI sought to dispel claims that there were delays on part of the banks and itself to report the fraud and register a case, respectively. While a loan sanctioned to the company became a non-performing asset (NPA) in 2013 and a debt restructuring effort failed to revive it, leading to a second NPA declaration in 2016, a complaint of fraud was made to the CBI only in 2019. The agency, which received a second complaint in August 2020, has only now registered an FIR.

The CBI sought to explain the delays citing the involvement of 28 banks and close to 100 associated companies as well as the withdrawal of consent by various states. It also emphasized that the company had been doing business with SBI since 2001 and the majority of the defaulted loan was disbursed between 2005 and 2012.

“It may also be mentioned that the withdrawal of general consent to the CBI investigation by certain states has made the registration of bank fraud cases more challenging. There are around 100 high-value bank fraud cases that could not be registered due to non- accordance of specific consent u/s 6 of DSPE Act by state governments where the general consent has been withdrawn,” the CBI said in a statement.

According to the agency, the ABG loan account was restructured under the corporate debt restructuring mechanism on March 27, 2014. However, the operations of the company could not be revived. On September 10 that year, NV Dand & Associates was deputed to conduct a stock audit of the company.

“The audit firm submitted its report on 30.04.2016 and observed various faults on the part of the accused company. Subsequently, the account of M/s ABG Shipyard Ltd was declared a non-performing asset on 30.07.2016 w.e.f. 30.11.2013,” the CBI said.

In April, 2018, Ernst and Young was hired to conduct a forensic audit of the company’s accounts for the 2012-2017 period. The company had already been referred to the National Company Law Tribunal, Ahmedabad, in August 2017 by ICICI Bank, the lead bank in the consortium, for the corporate insolvency resolution process.

“In between April 2019 to March 2020, various banks of the consortium declared the account of M/s ABG Shipyard as fraud. The fraud is primarily on account of huge transfers by M/s ABG Shipyard Ltd to its related parties and subsequently making adjustment entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting the bank loans, and funds were diverted to purchase huge assets in the name of its related parties. During the perusal of records and initial investigation, it is seen that the critical period was 2005-2012,” the CBI statement said.

According to CBI, after SBI made a comprehensive complaint in August 2020 answering all its queries on the 2019 complaint, the agency began verifying the claims made in the complaint.

“There are 28 banks …different nature of bank loans including cash credit loans, term loans, letters of credit, bank guarantees etc that were given as advance by the banks. After analysis of basic facts of the case, scrutiny, discreet verification, and the issues mentioned in the complaint and verification of the addresses of the accused persons, an FIR was registered,” the CBI statement said.

“Also, bank account details of the accused as well as related parties have been obtained. The accused have been located in India. Subsequently, lookout circulars against the accused have already been opened by the CBI. Earlier, State Bank of India had also opened [circulars] against the main accused in 2019. Further correspondences are being made with the consortium banks to provide details including documents with regard to the sanction of loan and its disbursal,” the CBI statement said.