ABG Shipyard fraud: Lapses, involvement of PSB staff not found, says govt

The government on Monday informed the Parliament that no staff lapses or involvement of staff of public sector banks (PSB) has been found in the ABG Shipyard fraud case.
 
Replying to a question about the fraud case in the Lok Sabha, Minister of State for Finance Bhagwat Karad, in a written reply, said, "As per inputs received from public sector banks, staff accountability has been conducted and no staff lapses/ staff involvement in the said fraud has been observed in examination of post NPA staff accountability/ post fraud re-examination of staff accountability."
 
Explaining the sequence of events, Karad said that ABG Shipyard was sanctioned credit facilities under consortium arrangement led by ICICI Bank. The account was declared as non-performing asset (NPA) by lender banks on August 1, 2013 and afterwards, and credit facilities were approved for restructuring under corporate debt restructuring (CDR) mechanism on March 24, 2014 by CDR empowered group.
 
"Subsequently, the member banks in the Joint Lenders Meeting (JLM) decided to appoint Ernst & Young Ltd Liability Partnership (EY) for conducting forensic audit in ABGSL. EY submitted its forensic audit report (FAR) on January 21, 2019. Accordingly, in view of the findings of FAR, the account of ABGSL having principal exposure of Rs 14,349 crore and interest accrued thereon, was declared as fraud by the lead bank on April 24, 2019," he said.
 
Also Read: ABG Shipyard: How it plunged into debt and defrauded 28 banks of Rs 22,842 cr

Karad said that a complaint was filed by the State Bank of India (SBI) with the Central Bureau of Investigation (CBI) in the matter on November 8, 2019. Subsequently, in the JLM held on November 17, 2020, it was decided that SBI should file the complaint on behalf of all consortium members.
 
Accordingly, SBI revised complaint on August 25, 2020, after receiving mandate from all consortium members, and the final complaint on December 14, 2020.
 
The bank also filed an application with the National Company Law Tribunal (NCLT) to initiate Corporate Insolvency and Resolution Process. In April 2018, the NCLT also passed a liquidation order for ABG Shipyard, the minister said in the reply.
 
"In addition to above, several measures have been taken by banks for recovery of dues, including, inter alia, filing of recover suit in Debt Recovery Tribunal, issuance of look-out circular against the promoters/ guarantors, filing application for initiating insolvency proceedings against the personal guarantors and declaration of company and its directors as wilful defaulters," he said.
 
As per the information provided by the government, ICICI Bank has the highest exposure of Rs 7,089 crore in the fraud case, followed by IDBI bank with Rs 3,639 crore, SBI with Rs 2,925 crore, Bank of Baroda with Rs 1,614 crore, among others.

Also Read: How ABG Shipyard's promoter Rishi Agarwal siphoned off bank funds