ABG Shipyard, its Directors defrauded 28 banks of 22,842 cr: CBI

According to the Central Bureau of Investigation, BG Shipyard and its directors Rishi Agarwal, Santhanam Muthuswamy, and Ashwini Kumar have allegedly defrauded 28 banks of Rs 22,842 crore.

The CBI has registered a First Information Report on the complaint of the State Bank of India which has given a loan of Rs ₹ 2468.51. Besides, other banks such as ICICI, Bank of Baroda, IDBI, PNB have also given loans to the company.

"The Forensic Audit report dated 18.01.2019 submitted by M/s. Ernst & Young LP for the period April 2012 to July 2017 revealed that the accused have colluded together and committed illegal activities including diversion of funds, misappropriation, and criminal breach of trust and for purposes other than for the purpose for which the funds are released by the Bank", the FIR alleged.

It added, "Global crisis has impacted the shipping industry due to fall in commodity demand & prices and subsequent fall in cargo demand. The cancellation of contracts for a few ships/vessels resulted in piling up of inventory. This has resulted in a paucity of working capital and caused a significant increase in the operating cycle, thereby aggravating the liquidity problem & financial problem.”

It also said that there was no demand for commercial vessels as the industry was going through a downturn even in 2015. “Further, there were no fresh defence orders released in 2015. The company was finding it very difficult to achieve milestones as envisaged in CDR. Thus, the company was unable to service the interest and instalments on the due date," the CBI alleged in its FIR.