Between 2005 and 2012, the ABG scam was perpetrated: CBI

The Central Bureau of Investigation (CBI) said the critical period of its investigation into the bank fraud involving ABG Shipyard Ltd, worth Rs 22,842 crore, was from 2005 to 2012 — a statement that comes after the Congress chastised the BJP-led government at the Centre for failing to file a case and running a "loot and escape" scheme.

Between 2004 to 2014, the United Progressive Alliance (UPA) led by Congress was in power.

The CBI has also issued lookout notices for Rishi Kamlesh Agrawal, the company's former chairman and managing director, and eight others to ensure that they do not depart India. The accused have been found in India, according to the agency. The top investigation agency noted in a rare, detailed statement that the majority of disbursements in ABG Shipyard's account occurred between 2005 and 2012, and the loan account became a non-performing asset (NPA) on November 30, 2013.

ABG is accused of defrauding a consortium of 28 banks worth Rs. 22,842 crore, lead by ICICI Bank, with ICICI having the greatest exposure of Rs. 7,089 crore, followed by IDBI Bank (3,639 crore), State Bank of India (2,925 crore), Bank of Baroda (1,614 crore), and Punjab National Bank (1,244 crore).

“As per SBI’s complaint, the NPA is to the tune of ₹22,842 crore (approx.) and the majority of the disbursement happened between 2005 and 2012 by a consortium of 28 banks led by ICICI Bank and including SBI. The account was restructured under CDR (corporate debt restructuring) mechanism on March 27, 2014. However, the operations of the company could not be revived,” RC Joshi, a spokesperson for the CBI, issued a statement.

M/s N V Dand & Associates was delegated to conduct a stock audit of ABG Shipyard on September 10, 2014, he claimed. On April 30, 2016, the auditing firm filed its report, which found a number of flaws in the accused corporation. “Subsequently, the account of M/s ABG Shipyard Ltd was declared NPA on July 30, 2016 w.e.f. November 30, 2013,” the statement further reads.

On August 25, 2020, the SBI filed a complaint with the CBI, but the agency only filed a first information report earlier this month; the Congress has blamed the Centre for the delay. A CBI officer, who spoke on the condition of anonymity, said of the delay: “There are 28 banks involved in consortium with huge amount of disbursement. There was different nature of bank loans including CC (cash credit) loan, term loan, letter of credit, bank guarantee, etc. that were given as advance by the banks, and verification for all these documents takes time.”

CBI announced on Tuesday, referring to the forensic audit done by EY (which began in 2018) for the period 2012 to 2017, that: “As per the usual practice, these forensic audits cover a period starting approximately three to four years prior to the date of declaration of NPA, which, in this case, was 2016.”

Between April 2019 and March 2020, many banks in the consortium declared ABG's account "fraud," according to CBI, “The fraud is primarily on account of huge transfer by M/s ABG Shipyard to its related parties and subsequently making adjustment entries. It is also alleged that huge investment was made in its overseas subsidiary by diverting the bank loans and funds to purchase huge assets in the name of its related parties. “During the perusal of records and initial investigation, it is seen that the critical period was 2005-2012,” says Joshi.

On Tuesday, the central agency claimed that the withdrawal of general permission under section 6 of the Delhi Special Police Establishment (DSPE) Act by numerous states hampered its investigation into at least 100 high-value bank crimes. The general consent for CBI probes in West Bengal, Rajasthan, Mizoram, Jharkhand, Maharashtra, Punjab, Kerala, and Chhattisgarh has been revoked.

The central agency cannot file cases or conduct raids in these states without the states' permission. Joshi said, “There are around 100 high-value bank fraud cases that could not be registered due to non-accordance of specific consent u/s 6 of DSPE Act by state governments where the general consent has been withdrawn.”

To be sure, while the ABG Shipyard case was lodged by the CBI's Delhi branch, it has no connection to Section 6 of the DSPE Act.