The Central Bureau of Investigation (CBI) on Tuesday said that look out circulars against Rishi Kamlesh Agarwal, the former chairman and managing director of ABG Shipyard, and eight others in a bank fraud case of over ₹ 22,842 crore.

“The accused have been located in India. Subsequently, look out circulars (LOCs) against the accused have already been opened by CBI,” the agency said in media release. Earlier, State Bank of India had also opened LOCs against the main accused in 2019. Such moves will prevent them from leaving the country, officials said.

Alleged offences

The agency has also named the then executive director Santhanam Muthaswamy, directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia and another company ABG International Pvt Ltd for alleged offences of criminal conspiracy, cheating, criminal breach of trust and abuse of official position under the Indian Penal Code (IPC) and the Prevention of Corruption Act, they said.

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In continuation of the investigation, the CBI conducted searches at 13 locations on February 12. Officials claimed they had received several incriminating documents, such as books of accounts of the accused borrower company, which was being scrutinised.

The bank had first filed a complaint on November 8, 2019 on which the central investigation agency had sought some clarifications on March 12, 2020. The bank filed a fresh complaint in August that year. After “scrutinising” for over one- and-a-half-years, the CBI acted on the complaint, filing an FIR on February 7, 2022.

The company was sanctioned credit facilities from 28 banks and financial institutions led by ICICI Bank, with SBI, having exposure of ₹2,468.51 crore, they said.

A forensic audit by Ernst and Young has shown that between 2012-17, the accused colluded together and committed illegal activities, including diversion of funds, misappropriation and criminal breach of trust, they said. It is the biggest bank fraud case registered by the CBI. Funds were used for purposes other than for which they were released by banks, it said.

The loan account was declared as a non-performing asset (NPA) in July, 2016 and a fraud in 2019. In its complaint on August 25, 2020, SBI said ABG Shipyard Ltd (ABGSL) is the flagship company of the ABG Group which engaged in the business of ship building and ship-repair.

Ship-building major

The ABGSL, being a major player in Indian ship-building industry, operates from shipyards that are located at Dahej and Surat in Gujarat, with a capacity to build vessels up to 18,000 dead weight tonnage (DWT) at Surat Shipyard and 1,20,000 dead weight tonnage (DWT) at Dahej Shipyard.

The company has constructed over 165 vessels (including 46 for export market) in the last 16 vears, including specialised vessels like the newsprint carriers. self-discharging and loading bulk cement carriers, floating cranes etc with class approval of all international classification societies such as Lloyds, American Bureau of Shipping, Bureau Veritas, IRS, DNV, the complaint said.

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

SBI said there was no demand of commercial vessels as the industry was going through a downturn even in 2015 which was further aggravated due to lack of defence orders, making it difficult for the company to maintain repayment schedule, it said.

“The company has been referred to NCLT, Ahmedabad, by ICICI Bank for CIRP,” it said.