ABG Shipyard's independent directors under scanner now

23 Feb
2022

ABG Shipyard's independent directors under scanner now

By Staff Writer

Federal agencies investigating the ABG Shipyard fraud case are looking into the role of independent directors on its board, including two who were nominated by one of the banks allegedly duped by the Surat-based shipbuilding company, people in the know told ET.

Both the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) have booked ABG Shipyard on charges of cheating, criminal conspiracy, relevant provisions of the Prevention of Corruption Act, and money laundering for allegedly defrauding a consortium of banks to the tune of ₹22,482 crores.

Meanwhile, CBI again questioned Rishi Kamlesh Agarwal, former chairman of embattled ABG Shipyard, on Tuesday in connection with what is being termed as the country's biggest bank fraud. He was quizzed for over eight hours.

Agarwal was quizzed on Monday for over nine and a half hours.

His advocate Vijay Aggarwal had claimed that Agarwal had left ABG Shipyard from all executive capacities in 2008 and the company's debt at that time was ₹441 crore, "which was duly repaid", as ET reported in its edition on Tuesday.

"The company is not a fly-by-night operator and is in the business of building shipyards since 1985," Aggarwal had told ET. He argued the shipbuilding industry world over suffered due to the global meltdown in 2008 and survived only based on government interventions.

Raising question marks over the role of banks, the advocate said, "Since 2016, the banks have 51% shareholding in the company and were running the company, while the promoters had only 7% shareholding in the company. Allegations now leveled were in the knowledge of the banks for years but the same was never considered as fraudulent. The said stand is nothing but an afterthought." He said his client has duly cooperated with the investigation and shall continue to do so.

On the forensic audit report prepared by Ernst & Young (EY) on the asking of the complainant banks, Aggarwal claimed the report "did not even consider the replies by the management of ABG" and only mentioned the replies as "as if" comments. He claimed the allegations leveled in the audit report are nothing but assumptions. The January 2019 audit report had flagged "potential diversions" of loans borrowed from the banks by the company and its directors.