The State Bank of India on Sunday said that the consortium of banks, which had made loans to ABG Shipyard, had tried to revive its operations but all efforts failed as it was going through a downturn.
It said that the fraud was mainly attributed to diversion of funds, misappropriation, and criminal breach of trust.
The Central Bureau of Investigation (CBI) on Saturday conducted raids in Rs 22,842 crore loan fraud case lodged against Gujarat-based ABG Shipyards and its directors, at over a dozen places, including Surat, Bharuch, Mumbai, and Pune which led to the recovery of incriminating documents.
A complaint against them was lodged by the SBI on the basis of which the CBI filed an FIR naming Rishi Aggarwal and Santhanam Muthuswamy, the directors of ABG Shipyards.
The SBI said that due to poor performance, the account became NPA on November 11, 2013.
“ABG Shipyard was incorporated on March 15, 1985, has been banking arrangements since 2001. Financed under consortium arrangement over a two dozen lenders. Leader in Consortium was ICICI Bank. Due to poor performance, account became NPA in 2013. Several efforts were made to revive the company operations but could not succeed,” the SBI said in a press note.
The SBI further stated that ABG Shipyard’s account was restructured under CDR mechanism in March 2014 by all lenders. However, as the shipping industry was going through a downturn, one of the worst ever seen, the company could not be revived.
“As the restructuring failed, account classified as NPA in July 2016 with back dated effect from November 30, 2013. E&Y were appointed as Forensic Auditor by lenders during April 2018 and they submitted their report in January 2019. E&Y report was placed before the Fraud Identification Committee of 18 lenders in 2019. Fraud is mainly attributed to diversion of funds, misappropriation and criminal breach of trust,” the SBI statement said.
Although, ICICI Bank was the lead lender in the consortium and IDBI was the second lead, it was preferred that the SBI, being the largest PSB lender, lodges the complaint with the CBI. The first complaint was filed with CBI in November 2019. There was continuous engagement between the CBI and thae bnks and further information was getting exchanged.
The circumstances of the fraud as well as CBI requirements were further deliberated in the various meetings of joint lenders and a fresh and comprehensive second complaint was filed in December 2020. The account is presently undergoing liquidation under a NCLT-driven process.
A fraud is declared basis on the forensic audit report findings that is discussed thoroughly in joint lenders meetings. Typically, when a fraud is declared, an initial complaint is preferred with CBI and based on their enquiries, further information is gathered.A
In a few cases, when substantial additional information is gathered, a second complaint incorporating full and complete details is filed which forms basis for the FIR. At no point in time, there was any effort to delay the process. The lenders forum diligently follows through with CBI in all such cases, the SBI said.