Biggest ever bank fraud; Govt reluctance in probing ABG Shipyard case, a mystery

ABG Shipyard in alleged Rs 22,842-cr fraud, consortium of banks led by State Bank of India duped

The bank fraud case involving ABG Shipyard comes across as the biggest ever. An alleged case of cheating a consortium of banks led by State Bank of India of over Rs 22,842 crore, the Central Bureau of Investigation (CNI) has booked the company’s then Chairman and Managing Director Rishi Kamlesh Agarwal and others.

But then who is to blame for such a gross violation of law?  The allegations range from offences of criminal conspiracy, cheating, criminal breach of trust to abuse of official position under the IPC and the Prevention of Corruption Act.  The agency has also named the then Executive Director Santhanam Muthaswamy, Directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and another company ABG International Pvt Ltd.

The CBI move comes after a series of complaints from the SBI – one on November 8, 2019, and later in August the same year.  It took close to two years for the CBI to act and in February 7, 2022 an FIR was filed. As per reports quoting the bank, credit facilities from 28 banks and financial institutions with the SBI were sanctioned and the exposure stood at Rs 2468.51 crore.

ABG Shipyard and the alleged funds’ diversion

However, it was found that between 2012 and 2017, the accused had plotted and committed illegal activities including diversion of funds, misappropriation and criminal breach of trust. The funds the company laid its hands on were used for purposes other than for the real purpose they were released for.

It may also be noted that ABG Shipyard had been allotted 1.21 lakh square metres of land in 2007 by the BJP government in Gujarat, and this has been found as part of the undue favours doled out to the company. Allotting land at Rs 700 per square metre, while the price of the land was 100 per cent higher calls for some serious probe, indeed. ABG Shipyard is located in Dahej and Surat in Gujarat.

The real case here lies in the form of the delay in which the Union government Narendra Modi government preferred to take note of the fraud. The delay was to the tune of five years after the liquidation proceedings of ABG Shipyard happened. The FIR in connection with the alleged duping of 28 banks came about after such a long period.

Govt stance, a mystery

It remains a mystery as to why the Narendra Modi government hesitated to take note of the allegations made five years ago. In fact, the Congress party had on February 15, 2018, pointed out to the government that something was fishy about ABG Shipyard availing funds.

It also needs to be recalled that the State Bank of India had notified the CBI way back in in November 2018, that ABG Shipyard is part of a fraudulent transaction and that criminal action had to be initiated.

The manner in the Narendra Modi government at the Centre sought to ignore such a serious case, calls for investigation. The gross mismanagement of the banking system has come to the fore with this case. At a time when the Union government itself has made it known to the public that a variety of instances of bank fraud involving a total amount of Rs 5.35 lakh crore had happened, alleged protection of fraudsters doesn’t really look good. It is already a grave situation in the banking industry as of now, with NPAs between 2014 and 2021 reported. And this, is not something to be ignored by the powers that be.

Sanjeev Ramachandran

A journalist with 23 years of experience, Sanjeev has worked with reputed media houses such as Business Standard, The Ne More »
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