In India's Biggest Bank Loan Scam, CBI's Airport Alert
The London-headquartered professional services company had conducted a forensic audit of ABG Shipyard and submitted its report in January 2019 to a consortium of 28 banks allegedly defrauded by the Surat-based ship builder in what is termed as the country's biggest bank fraud.
Based on the audit report, a Mumbai branch of State Bank of India approached CBI in November 2019, seeking registration of a corruption case.
The agency, however, returned the complaint seeking additional information from the bank. The agency also asked SBI Mumbai to furnish a list of witnesses. The bank, in its fresh complaint in September 2020, suggested EY and the general manager of its Mumbai branch as prosecution witnesses in the case.
People in the know said the audit report will be examined and officials who conducted the audit may be quizzed by CBI.
The audit report will also be examined to ascertain if it missed any lapses, the people said. "Depending on evidence and the role of those involved, the agency will decide who will be prosecuted and who will be made a witness," one of them said.
In its audit report, a part of which was reproduced in CBI's FIR, EY has highlighted "potential circular transactions ..
New Delhi: Lookout circulars have been issued against the bosses and senior executives of ABG Shipyard in a ₹ 23,000 crore alleged bank fraud case. A lookout circular is used to stop any person wanted by the law enforcement authorities from leaving the country via airports and border crossings.
The Directors of the shipping firm include Rishi Agarwal, Santhanam Muthuswamy and Ashwini Kumar. The case is said to be India's biggest bank loan scam. ABG Shipyard defaulted on ₹ 22,842 crore loans that it owed to 28 banks including State Bank of India, the Central Bureau of Investigation, or CBI, says.
ABG Shipyard diverted the funds to at least 98 related companies, sources have told NDTV.
ABG Shipyard is the flagship company of the ABG Group which is engaged in shipbuilding and ship repair. The shipyards are located in Dahej and Surat in Gujarat.
The latest lookout circular in the ABG Shipyard case adds to a long list of similar cases in the country, from the Punjab National Bank fraud involving businessmen Nirav Modi and his uncle Mehul Choksi to the defunct Kingfisher Airlines' boss Vijay Mallya's bank loan default. All of them are fighting extradition to India.
"In between April 2019 and March 2020, various banks of the consortium declared the account of ABG Shipyard as fraud. The fraud is primarily on account of huge transfer by ABG Shipyard to its related parties and subsequently making adjustment entries," the CBI said in a statement.
"The huge investments were made in its overseas subsidiary by diverting the bank loans. Funds were diverted 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," the CBI said.
The CBI said withdrawal of "general consent" by state governments has made filing bank fraud cases more challenging. "There are some 100 high-value bank fraud cases that could not be registered due to non-accordance of specific consent... by state governments where the general consent has been withdrawn," the
CBI said in the statement. States withdrawing "general consent" to the CBI, however, has little bearing on the ABG Shipyard case as it was filed in Delhi, where the CBI has original jurisdiction.
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