Rishi Agarwal faces heat in ABG Shipyard fraud; Will need to do a lot of explaining

ABG Shipyard diverted loans through arms in Singapore and by other means between 2012 and 2017

Undertaking illegal activities such as diversion of funds, misappropriation and criminal breach of trust and misusing bank’s money for purposes other than for what the funds were released – these are certain acts Rishi Kamlesh Agarwal would have to explain and elaborate to the Central Bureau of Investigation (CBI) as he gets picked up by the investigation agency in connection with the Rs 22,842 crore fraud that has come to light of late.

Rishi Agarwal, who as the chairman of ABG Shipyard then, the company now facing the heat in connection with the biggest fraud ever in Indian banking history. As he was summoned for questioning by the Central Bureau of Investigation he will have to do a lot of explaining, for sure.  He, along with executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and the company ABG International Pvt Ltd, are in the accused list.

CBI was able to get Agarwal for questioning after a look out notice issued towards preventing him from leaving the country proved successful. Agarwal also had a lookout against him issued by the complainant State Bank of India earlier. Probe into the fraudulent activities spearheaded by the company has brought to light alleged diversion of funds using close to 98 related entities.

ABG Shipyard caused losses of Rs 22,842 cr to banks

ABG Shipyard had come into being on March 15, 1985, and was described as a company that was into shipbuilding and ship repair at Dahej and Surat in Gujarat. A complaint by State Bank of India has prompted the CBI to book ABG Shipyard, its directors, and ABG International Pvt Limited for allegedly causing losses of Rs 22,842 crore to a consortium of 28 banks. The company’s account had, on November 30, 2013, into a non-performing asset (NPA).

Though successful on its terrain for quite long, ABG Shipyard saw its fortunes dwindling post 2013, and the very next year it posted a loss of Rs 199 crore. In a few years’ time, by March 2016, net loss saw itself piling up to Rs 3,704 crore. A debt revamp was initiated in 2013-14, and ABG Shipyard cancelled new ship orders, citing a cut in lending from banks, high borrowing cost, low capacity utilisation of the Dahej shipyard in Surat, and the expiry of the Centre’s shipbuilding subsidy scheme in 2007.  What happened later in is now on public domain.

Following allegations of fraud committed, Agarwal has been questioned by the CBI. Besides this, the Enforcement Directorate has also begun a money-laundering investigation against ABG Shipyard and its directors, and will most probably call them in them for interrogation.

The CBI probe this month found incriminating evidence such as account books, purchase or sales details, minutes of board meetings, share registers and contract files. It was alleged that ABG Shipyard diverted loans through subsidiaries in Singapore and by other means between 2012 and 2017.

Rishi Agarwal will need to explain

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. In 2019, after the SBI filed a complaint, the CBI registered an FIR. The company which had been doing business with the SBI since 2001, had defaulted majorly between 2005 and 2012.

Mumbai-based Rishi Kamlesh Agarwal is now at the mercy of the probes initiated by the CBI and the ED. With such a huge fraud that went to the extent of cheating a consortium of banks led by ICICI Bank and State Bank of India (SBI) being investigated, Agarwal is being made to explain the crime he has spearheaded. He sure will have to do that. Agarwal and Co should, of course, be made to explain every detail, as it involves breach of trust and colluding in carrying out a criminal act of such humongous proportions.

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