The CBI has found that ABG allegedly used as many as 98 related companies in

routing of funds, which ED officials say clearly point towards money laundering. The
ED has powers to attach assets of companies and individuals involved in money
laundering.
This is not the first time that the ABG Group has come under the ED scanner. In
2019, the agency had attached assets worth Rs 963 crore belonging to a cement
manufacturing subsidiary of the group in connection with its money laundering
probe into the affairs of the IL&FS.
BANKS VULNERABLE
WHY ARE SECURITY
MEASURES NOT ASSURED?
From once upon a time, India's largest private shipyard firm to a debt-
ridden defaulter, ABG Shipyard has been in the news for all the
wrong reasons.
In the country's biggest-ever bank fraud case, the Central Bureau of
Investigation (CBI) has booked the Gujarat-based facility for
defrauding 28 banks to the tune of more than Rs. 22,800 crore.
According to a Forensic Audit report conducted by Ernst & Young
LLP, from the period of April 2012 to July 2017, "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.“
While the CBI has issued lookout circulars against the
accused, including company CMD Rishi Aggarwal, to prevent
them from fleeing the country, the ED is examining
documents related to the case to map money laundering
trails. The CBI has also found that as many as 98 related-
companies of the ABG Group were involved in routing of
funds. “This is a fit case for ED to probe as there is clear
evidence of money being moved in a circuitous way. Case
papers are being scrutinised and a case under the
Prevention of Money Laundering Act (PMLA) will be
registered soon,” a senior ED official said.
According to the SFIO report, in 2017, the Reserve Bank of India
(RBI) in its report on IFIN for fiscal 2015 had red-flagged
insufficient security cover in terms of exposure to ABG
International, and its group firm Onaway Industries. In
September 2018, IFIN classified its loan to ABG Shipyard as an
NPA. In State Bank of India, the primary complainant against
ABG Shipyard in the FIR registered by CBI, similar delay has
been flagged. Loan sanctioned to the company turned NPA in
2013 and a debt restructuring effort lead to a second NPA
declaration in 2016, a complaint of fraud by the company was
made to the CBI only in 2019. After a second complaint in Aug.
2020, now registered an FIR, on February 7
On Tuesday, the CBI sought to explain the delay through complexity of the
case, involvement of multiple banks (28) and close to 100 associated
companies of ABG, and even withdrawal of consent by various states. It
also emphasised that the company has been in business with the SBI
since 2001 and the majority of the defaulted loan was disbursed between
2005 and 2012.
“It may also be mentioned that the withdrawal of general consent to CBI
investigation by certain states has made the registration of bank fraud
cases more challenging.
There are around 100 high value bank fraud cases that could not be
registered due to non-accordance of specific consent u/s 6 of DSPE Act by
state governments where the general consent has been withdrawn,” the
CBI said in a statement.
The case is being described as India’s biggest bank fraud. In five years
between 2012 and 2017, ABG Shipyard, a Gujarat based ship-building
firm, allegedly defrauded 28 banks.
As a result of this revelation, the Modi dispensation is under fire, with the
Opposition accusing the government of aiding the culprits and delaying
the uncovering of this loot that occurred in the BJP-ruled state.
Sitharaman said that the ABG Shipyard account turned NPA during the
erstwhile UPA regime and the banks took lesser than normal time to
detect the fraud perpetrated by the shipping firm. "...in this particular
case with that kind of a measurement, actually, I should say to the credit
to the banks, they've taken lesser than what is normally an average time
to detect these kinds of frauds," she said at a press conference after
addressing the members of the RBI board."