- Another big scam has come to light in the country.
- This scam is bigger than the one by Vijay Mallya (9,000 crore rupees) and Nirav Modi (14,000) with estimated fraud of around 22,842 crore rupees
- ABG Shipyard is a three-and-a-half-decade old company, run by Chairman and Managing Director Rishi Kamlesh Agarwal.
Another big scam has come to the light in India, This scam is even bigger than the one by Vijay Mallya (9,000 crore rupees) and Nirav Modi (14,000) with estimated fraud of around 22,842 crore rupees or more than 3 billion dollars. ABG Shipyard, a three-and-a-half-decade old company, run by Chairman and Managing Director Rishi Kamlesh Agarwal, has defrauded many PSUs and private sector banks with thousands of crore rupees.
CBI has registered the then Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevetia, and another company ABG International Pvt Ltd for alleged offenses of criminal conspiracy, cheating, criminal breach of trust, and abuse of official position under the IPC and the Prevention of Corruption Act.
Finance Minister Nirmala Sitharaman said that the investigation agencies took lesser time to detect the loans that turned NPA during the UPA era. “…in this particular case with that kind of a measurement, actually, I should say to the credit to the banks, they’ve taken lesser than what is normally an average time to detect these kinds of frauds,” Finance Minister Nirmala Sitharaman said at a press conference after addressing the members of the RBI board.
Talking about the chronology of the case, SBI said ABG Shipyard, which was incorporated on 15 March 1985, has been under banking arrangements since 2001. “Financed under consortium arrangement over a two dozen lenders. The leader in Consortium was ICICI Bank. Due to poor performance, the account became NPA on 30/11/2013. Several efforts were made to revive the company operations but could not succeed,” a statement from the biggest state-owned bank said.
ABG Shipyard, one of the largest ship manufacturing companies in the country, took loans worth thousands of crore rupees from private and public sector banks with the intention to never pay them back. The company siphoned the money into other accounts, and many bank employees are also said to be involved in whole fraud.
“The Forensic Audit report dated 18.01.2019 submitted by M/s. Ernst & Young LP for the period April 2012 to July 2017 revealed that the accused have colluded together and committed illegal activities including diversion of funds, misappropriation, and criminal breach of trust and for purposes other than for the purpose for which the funds are released by the Bank”, the CBI said in its FIR.
Further details of the issue will emerge slowly but the broad storyline remains the same. A company got loans worth thousands of crore rupees from PSUs and private banks using its political connections and could not pay them back due to two reasons – the first being the slowdown of the global and Indian economy in the last decade and the second being not having the intention to pay back or declare a default.
The NPA crisis during the UPA era emerged due to the slowdown of the global economy and phone call loans drained the Indian economy in the last decade. In the last few years, the Modi government tried to solve the issue by implementing structural reforms such as the Insolvency and Bankruptcy Code, which has played a major role in improving the state of the political economy and the quality of the firms operating in the market. This case is also expected to go through IBC process to get resolved.