The Enforcement Directorate (ED) has taken a significant step in the money laundering case by seizing assets belonging to ABG Shipyard Limited worth Rs. 2,747 crores. This course of action was adopted as a result of the investigation into a money laundering case involving fraudulent bank loans. The company’s confiscated assets include farmland, businesses, and bank accounts. The ED found that ABG Shipyard, its group firms, and its linked companies were the targets of a money laundering investigation by the ED.
The Prevention of Money Laundering Act’s (PMLA) property seizures have a combined value of Rs 2,747.69 crore. The company’s founder, Rishi Kamlesh Agarwal, was detained by the CBI the day before the ED took action. The connected properties included shipyards, farmland, and plots in the Gujarati cities of Surat and Dahej, according to a statement from the ED.
ABG Shipyard Limited, its group companies, and other linked firms’ bank accounts are also listed, along with several commercial and residential properties throughout Gujarat and Maharashtra. ABG Shipyard Limited, its connected businesses, Bermaco Energy System Limited, Dhananjay Datar, Savita Dhananjay Datar, Krishna Gopal Toshniwal, and Viren Ahuja are the owners of the confiscated property.
According to the ED, the investigation revealed that ABG Shipyard Ltd.’s chairman and managing director, Agarwal, had borrowed money from a group of financial institutions headed by ICICI Bank, Mumbai. This loan was taken out to cover startup costs as well as other business expenses.
The agency added that ABG Shipyard Limited misappropriated the credit facilities and shifted the funds to further locations both inside and outside of India. This was accomplished using a number of loans, advances, investments, etc. These suspected unlawful transactions, according to the allegations, cost the banks Rs 22,842 crore. The bank initially submitted the complaint on November 8, 2019. The CBI then requested clarifications from the corporation on March 12, 2020. The CBI filed an FIR in February of this year following a new complaint and inquiry in the month of August.
ABG Shipyard: ED attaches assets worth Rs 2,747 cr in money laundering case
Agricultural lands, commercial assets, dockyards, and bank deposits totaling more than Rs 2,747 crore have been attached, according to the ED, as part of an alleged money laundering probe involving bank loan fraud against ABG Shipyard Ltd., its group companies, and affiliated entities.
Shipyards in Surat and Dahej, Gujarat, as well as various commercial and residential properties in Gujarat and Maharashtra, as well as bank accounts owned by ABG Shipyard Ltd., its group companies, and other related entities are among the seized properties, according to a statement from the federal agency.
According to the Prevention of Money Laundering (Act), the total amount of the assets that have been temporarily attached is Rs 2,747.69 crore.
The company’s founder, Rishi Kamlesh Agarwal, was detained by the CBI a day before the Enforcement Directorate’s operation.
According to the ED, an investigation determined that ABG Shipyard Ltd. and its Chairman and Managing Director Agarwal had borrowed money from a group of banks led by the ICICI Bank, Mumbai, under the guise of covering capital needs and other business expenses.
However, it claimed that ABG Shipyard Ltd. “misappropriated” the credit facilities obtained from the consortium and “diverted” the funds for uses other than their intended use, donning various loans, advances, investments, and other forms of compensation to a number of affiliated companies established both in India and abroad.
The banking consortium allegedly suffered a “monetary loss” of Rs 22,842 crore as a result of these alleged unlawful transactions.
ABG Shipyard Ltd., its affiliated firms, Bermaco Energy Systems Ltd., Dhananjay Datar, Savita Dhananjay Datar, Krishna Gopal Toshniwal, and Viren Ahuja are the owners of the attached assets, according to the statement.
The Central Bureau of Investigation (CBI) filed an FIR in February, which is the basis for the money laundering investigation.
In response to a complaint filed by the State Bank of India, the CBI opened an investigation into possible violations of the Prevention of Corruption Act and the Indian Penal Code (IPC), including criminal conspiracy, fraud, criminal breach of trust, and misuse of a public office.
According to CBI authorities, the SBI was a member of a group of 28 banks and financial institutions that was led by the ICICI Bank and had an exposure of Rs 2,468.51 crore.
With shipyards in Gujarat’s Dahej and Surat, the ABG Shipyard has played a significant role in the country’s shipbuilding industry. It can construct ships with a dead weight tonnage (DWT) of up to 18,000 at the shipyard in Surat and 1,20,000 at the shipyard in Dahej.
The company, which had had amazing growth, having built 165 vessels in 16 years, began exhibiting stress as a result of the global shipping industry downturn, which brought about inconsistencies in the repayment schedule.
The complaint from the SBI, which is included in the CBI FIR, has stated that “the cancellation of contracts for few ships and vessels resulted in piling up of inventory, which has resulted in a paucity of working capital and caused a significant increase in the operating cycle, thereby aggravating the liquidity problem and financial problem.”
In their complaint, the SBI claimed that there was no market for commercial vessels due to the industry’s collapse even in 2015. This situation was made worse by the lack of defense orders, which made it challenging for the company to adhere to its payback schedule.
After the loan accounts were identified as non-performing assets in July 2016, the lender banks requested a forensic audit.
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According to the officials, the audit performed by Ernst and Young revealed that the accused worked together between 2012 and 2017 to commit illegal acts such as theft, misappropriation, and criminal breach of trust.
They added that the business had been “submitted to NCLT, Ahmedabad, by the ICICI Bank for Corporate Insolvency Resolution Process (CIRP)” and claimed that funds had been utilized for reasons other than those for which they had been released by banks.
The bank had initially complained on November 8, 2019, and on March 12, 2020, the CBI requested more details. In August of that year, a new complaint was made.