The Rs 22,000-crore ABG Shipyard Case: A timeline of India's biggest bank fraud

Rishi Agarwal, the chief of ABG Shipyard was arrested recently. After his arrest, assets worth Rs 2,700 crore of the company were frozen by the Enforcement Directorate (ED). Here's how the drama of India's biggest banking fraud has unraveled over the years.

What's the fraud? The CBI has accused ABG Shipyard founder and chief Rishi Agarwal of criminal breach of trust, misappropriation, and diverting funds that were received from banks. 

From 2005 to 2012, ABG Shipyard had taken massive bank loans from a lineup of banks like SBI, ICICI, IDBI and many more. ABG used this borrowed money for unofficial purposes, diverted and invested the cash into its overseas subsidiaries, bought assets in the names of affiliated companies and transferred money to several offshore related parties, all off-record. ABG Shipyard created a web of transactions to misuse the amount lent by the consortium of 28 banks and stopped paying interest on these loans from 2014 onwards. Once SBI declared ABG loans as a non-performing asset, and the subsequent forensic audit showed large-scale fund diversion, the downward tumble began. 

Here's a timeline of the case:

The 'Ache Din' 

• ABG had taken massive loans between 2005 and 2012. The total amount was Rs 22,842 crore from 28 banks. Some of the top loans borrowed were: 

1. ICICI Bank: Rs 7,089 crore,
2. IDBI Bank: Rs 3,639 crore,
3. SBI: Rs 2,925 crore,
4. Bank of Baroda: Rs 1,614 crore,
5. Exim Bank: Rs 1,327 crore
6. Punjab National Bank: Rs 1,244 crore,
7. Indian Overseas Bank: Rs 1,244 crore, and
8. Bank of India: Rs 719 crore 

• In 2012-13, ABG made a profit of Rs 107 crore and total revenues of Rs 2,149 crore which gave a good picture to outsiders. 
• In 2013-14 however, ABG was unable to repay debt interests, so the loans were restructured and interest rates were reduced for the company. 

The Flip

• From 2013-2014 onwards, ABG started posting financial losses. In 2014, ABG posted a loss of Rs 199 crore, while in 2016, the losses increased to Rs 3,704 crore. The company gave reasons like cancellation of ship/vessel orders, dip in lending from banks, high cost of borrowing and low capacity utilisation to justify the massive losses. 
• In 2016, SBI declared that the ABG loans had turned into a non-performing asset since they had not serviced their loans for 3 consecutive years, even after going through extensive debt restructuring. 

The Investigations

• In August 2017, the ABG case was referred to the National Company Law Tribunal (NCLT) for the 'Corporate Insolvency Resolution Process'.
• In April 2018, Ernst & Young was appointed as the forensic auditor to investigate the bank account transactions between 2012 to 2017. In Jan 2019, EY submitted reports that showed the detailed presence of irregularities between April 2012 and July 2017. The loan amounts were used to pay the expenses of other companies and were diverted into international securities, other investments, and properties. But the investments were never shown in the books of accounts. ABG showed in the books that they had paid ''accomodation deposits'' to companies whereas ABG had actually purchased properties for Chief Rishi Agarwal out of the same money. ABG also breached the debt restructuring agreements 
• In June 2019, SBI's fraud identification committee submitted a report declaring ABG Shipyard to be a fraud company.  
• In November 2019, SBI complained to CBI and alleged criminal conspiracy which caused losses of Rs 22,842 crore.  
• June to August 2020: State Bank of India along with other banks of the consortium filed a complaint to CBI.

Things become really serious 

• February 2022: CBI files an FIR and issues look-out notices against ABG Shipyard and its directors. 13 locations are searched on February 12, 2022, which lead to the discovery of several incriminating documents. 
• February 2022: ED also files a money laundering case for defrauding banks and CBI questions ABG chief Rishi Agarwal. 
• April 2022: ED conducts raids at 26 premises under the Prevention of Money Laundering Act in Mumbai, Pune and Surat. These premises belonged to ABG Shipyard, its sister companies and its executives. 
• 21 September 2022: CBI arrests ABG Shipyard promoter Rishi Agarwal.  
• 22 September 2022: ED attaches ABG Shipyard's assets over Rs 2,747 crore which includes shipyards at Surat and Dahej in Gujarat and Maharashtra, agricultural lands, commercial and residential premises, and bank deposits.