Rs 22,000 crore loan fraud: ED to begin probe against ABG Shipyard
DAYS AFTER the CBI booked Gujarat-based ABG Shipyard Ltd (ABG SL) for loan fraud of over Rs 22,000 crore, the Enforcement Directorate (ED) is now preparing to open money-laundering investigations against the company and its directors.
While the CBI has issued lookout circulars against the accused, including company CMD Rishi Aggarwal, to prevent them from fleeing the country, the ED is examining documents related to the case to map money laundering trails. The CBI has also found that as many as 98 related-companies of the ABG Group were involved in routing of funds.
“This is a fit case for ED to probe as there is clear evidence of money being moved in a circuitous way. Case papers are being scrutinised and a case under the Prevention of Money Laundering Act (PMLA) will be regered soon,” a senior ED official said.
The ED has powers to attach assets of companies and individuals involved in money laundering.
Incidentally, this is not the first time that the ABG Group has come under the ED scanner. In 2019, the agency had attached assets worth Rs 963 crore belonging to a cement manufacturing subsidiary of the group in connection with its money laundering probe into the affairs of the IL&FS.
The entrance of ABG shipyard at Ichhapore in Surat city. (Express photo Hanif Malek)
As reported The Indian Express, the ED probe had found that third-party lending IFIN — the non-banking financial arm of the IL&FS Group — to companies such as the ABG Group had caused a loss of Rs 2,000 crore to IFIN.
Earlier, a report the Serious Fraud Investigation Office (SFIO) had found several lapses in 13 loans of around Rs 1,080 crore granted the IFIN since 2010 to the ABG Group. The probe agency had termed a few of these transactions as an “evergreening exercise”, where the ABG Group used some money borrowed from the IFIN to prevent its accounts from turning into non-performing assets (NPAs).
According to the SFIO report, in 2017, the Reserve Bank of India (RBI) in its report on IFIN for fiscal 2015 had red-flagged insufficient security cover in terms of exposure to ABG International, and its group firm Onaway Industries. However, it was only in September 2018 that IFIN classified its loan to ABG Shipyard as an NPA.
In the case of State Bank of India, the primary complainant against ABG Shipyard in the FIR regered CBI, similar delay has been flagged. While the loan sanctioned to the company turned NPA in 2013 and a debt restructuring effort failed to revive it leading to a second NPA declaration in 2016, a complaint of fraud the company was made to the CBI only in 2019. The agency, which received a second complaint in August 2020, has only now regered an FIR, on February 7.
On Tuesday, the CBI sought to explain the delay through complexity of the case, involvement of multiple banks (28) and close to 100 associated companies of ABG, and even withdrawal of consent various states. It also emphasised that the company has been in business with the SBI since 2001 and the majority of the defaulted loan was disbursed between 2005 and 2012.
“It may also be mentioned that the withdrawal of general consent to CBI investigation certain states has made the regration of bank fraud cases more challenging. There are around 100 high value bank fraud cases that could not be regered due to non-accordance of specific consent u/s 6 of DSPE Act state governments where the general consent has been withdrawn,” the CBI said in a statement.
