The Central Bureau of Investigation has arrested Rishi Kamlesh Agarwal, former chairman and managing director of the ABG Shipyard Limited, in connection with the ₹22,842-crore bank fraud case.
According to the CBI, Mr. Agarwal was part of the conspiracy to cheat a consortium of 28 banks that had extended loans to the company from 2005 to 2012. Among the accused are Santhanam Muthaswamy, Ashwini Kumar, Sushil Kumar Agarwal, Ravi Vimal Nevetia and ABG International Private Limited.
The alleged fraud was detected during a forensic audit of the loan account involving transactions from April 2012 to July 2017. Based on the findings, the account was declared as fraud in June 2019. It had become a non-performing asset in July 2016 with effect from November 30, 2013.
The audit revealed alleged diversion of funds, misappropriation and criminal breach of trust. The funds were allegedly used for undeclared purposes, investments made via a Singapore-based subsidiary. Payouts running into hundreds of crores were made to related parties. Properties were also bought from the funds provided by ABG Shipyard, as alleged.
The total fair market value of the securities provided by the company against the credit facilities was $8,608.35 crore, according to the First Information Report (FIR) registered in February.
ABG Shipyard is in the business of ship building and repair works. Promoted by Mr. Agarwal, it is a major player in the industry, and has shipyards at Dahej and Surat in Gujarat. The company has the capacity to build vessels up to 18,000-dead weight tonnage at the Surat shipyard and 1.20-lakh dead weight tonnage at the Dahej unit.
The company has built more than 165 vessels, including 46 for export market, in the past 16 years. The FIR mentioned that a global crisis impacted the shipping industry due to a fall in the commodity demand and prices and resultant decline in the cargo demand. The cancellation of contracts for few ships/vessels lead to the piling up of inventory. The overall situation had aggravated the company’s liquidity/financial problem.
There was no demand of commercial vessels as the industry was going through a downturn even in 2015. Also, there were no fresh defence orders release that year.
