Five years after Indian shipbuilder ABG Shipyard filed for bankruptcy, India’s Central Bureau of Investigation (CBI) has launched a fraud investigation against the company and five executives.
CBI alleges that ABG Shipyard and key members of its management team – named Chairman and Chief Executive Rishi Kamlesh Agarwal, Executive Director Santhanam Muthaswamy and Directors Ashwani Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia – deceived a consortium of 28 banks on loans estimated at $3 billion. The lead banker in the lending program, India’s ICICI Bank, has an exposure of around $925 million, with smaller amounts owed to other lenders. This is the biggest loan fraud case ever opened in the Indian court system.
According to the CBI, ABG executives diverted funds from the loan program to overseas subsidiaries and misused the money to purchase assets. The loans became non-performing in 2013 and ABG Shipyard went bankrupt in 2017. An audit by Ernst & Young found signs of fraud two years later, and the State Bank of India – one of the creditors – filed a formal complaint in November. 2019.
Given the long delay between the State Bank of India’s complaint and the official announcement of a criminal investigation, India’s opposition Congress party has accused Prime Minister Narendra Modi’s government of not failed to act in a timely manner in this matter.
“Despite the apparent fraud and the swindling of public money, the CBI, SBI and the Modi government have continued to complicate the whole matter with bureaucratic wrangling and pushing files,” the party spokesperson said. of Congress, Randeep Surjewala.
Modi’s finance minister, Nirmala Sitharaman, pushed back against such criticism at a press conference on Monday. She noted that the loan became non-performing while the Congress Party was in power and said the fraud was detected faster than average for a case of financial malfeasance.