The ED on Thursday said it has attached dockyards, agricultural lands, commercial properties and bank deposits worth more than Rs 2,747 crore as part of an alleged bank loan fraud linked money laundering investigation against ABG Shipyard Ltd, its group companies and linked entities.
The seized properties include shipyards located at Surat and Dahej in Gujarat, agricultural lands and plots, various commercial and residential premises in Gujarat and Maharashtra and bank accounts owned by ABG Shipyard Ltd., its group companies and other related entities, the federal agency said in a statement.
The total value of the provisionally attached assets, under the Prevention of Money Laundering (Act), is Rs 2,747.69 crore.
The Enforcement Directorate action comes a day after the CBI arrested the founder of the company Rishi Kamlesh Agarwal.
Probe found that the ABG Shipyard Ltd. and its Chairman & Managing Director Agarwal availed various credit facilities/loans from consortium of Banks led by the ICICI Bank, Mumbai on pretext of meeting its capital requirements and other business expenses, the ED said.
However, it said, ABG Shipyard Ltd. “misappropriated” the credit facilities availed from the consortium and “diverted” the funds for the purposes other than its actual cause in the garb of various loans/advances/investments etc. to various related entities incorporated in India and abroad.
These alleged illegal transactions eventually caused “monetary loss” to the tune of Rs 22,842 crore to the banks consortium.
The attached assets belong to ABG Shipyard Ltd., its group companies, Bermaco Energy Systems Ltd., Dhananjay Datar, Savita Dhananjay Datar, Krishna Gopal Toshniwal and Viren Ahuja, it said.
The money laundering case stems from the FIR filed by the Central Bureau of Investigation (CBI) in February.
The CBI had registered the case on a complaint from the State Bank of India for the alleged offences of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act.
The SBI, with an exposure of Rs 2,468.51 crore, was part of a consortium of 28 banks and financial institutions led by the ICICI Bank, CBI officials had said.
The ABG Shipyard has been a major player in Indian ship building industry and operated from its shipyards located at Dahej and Surat in Gujarat. It has a capacity to build vessels up to 18,000 dead weight tonnage (DWT) at the Surat shipyard and 1,20,000 DWT at the Dahej shipyard.
The company, which had witnessed phenomenal rise having constructed 165 vessels in 16 years, started showing stress following global slump in the shipping industry bringing irregularities in repayment schedule.
“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 from the SBI, which is part of the CBI FIR, has said.
In its complaint, the SBI said there was no demand of commercial vessels because of downturn in the industry even in 2015, which was further aggravated due to lack of defence orders making it difficult for the company to maintain repayment schedule.
Once the loan accounts were declared non-performing assets in July 2016, a forensic audit was ordered by the lender banks.
The audit by Ernst and Young showed that between 2012 and 2017, the accused colluded together and committed illegal activities, including diversion of funds, misappropriation and criminal breach of trust, the officials said.
Funds were used for purposes other than for which they were released by banks, they said, adding the company has been “referred to NCLT, Ahmedabad, by the ICICI Bank for Corporate Insolvency Resolution Process (CIRP)”.
The bank had first filed a complaint on November 8, 2019 on which the CBI had sought some clarifications on March 12, 2020. It filed a fresh complaint in August that year.
After “scrutinising” for over one-and-a-half years, the CBI acted on the complaint filing an FIR on February 7 this year.