ED raids multiple locations in ABG Shipyard loan fraud case

New Delhi, April 26

The Enforcement Directorate (ED) has conducted raids at multiple premises of ABG Shipyard Ltd and its former promoters in Mumbai, Pune and Surat under provisions of the Prevention of Money Laundering Act (PMLA) in connection with their alleged involvement in a case relating to Rs 22,842 crore bank loan frauds.

CBI FIR says...

• The company was sanctioned credit facilities from 28 banks and financial institutions led by ICICI Bank, with the SBI having exposure of Rs 2,468.51 crore
• A forensic audit by Ernst and Young showed that between 2012 and 2017, the accused colluded and committed illegal activities, including diversion of funds, misappropriation and criminal breach of trust

Agency officials said 26 premises were being searched in these cities by ED sleuths to collect financial documents of the company and its former promoters and other persons linked.

The ED had filed a case under the PMLA in February after studying a CBI FIR against the former promoters of the ship building company apart from a forensic audit report prepared on the operations of the group. The CBI had booked ABG Shipyard Ltd and its then chairman and managing director Rishi Kamlesh Agarwal along with others for allegedly cheating a consortium of banks of Rs 22,842 crore. It had also named 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.

The ED is looking into the charges of alleged “diversion” of bank loan funds, creation of shell firms to launder public money and the role of the executives of the company and others. The officials said the ED would look into instances of “huge investments”, which were being made in the overseas subsidiary of the company by “diverting” the loan amount. It is also empowered to attach assets of the accused once the charges of money laundering and layering of funds are established, they said. The loans given to the company include categories like CC (cash credit) loan, term loan, letter of credit, bank guarantee etc.

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