Over 100 bank fraud cases not filed for want of consent by State Govts: CBI
The CBI has issued “lookout circulars” against the top management of ABG Shipyard in a Rs 23,000 crore alleged bank fraud case. The circular is used to stop a person from fleeing the country via airports and border crossings.
The CBI also said that the withdrawal of general consent to the agency by certain States has made the registration of bank fraud cases “more challenging”.
“There are around 100 high-value bank fraud cases that could not be registered due to non-accordance of specific consent under section 6 of Delhi Special Police Establishment Act by State Governments where the general consent has been withdrawn,” it said.
‘’Police” and “public order” being State subjects under the Constitution, the CBI needs general consent for probing cases in the jurisdiction of the States.
ABG Shipyard Ltd has been involved in business with the State Bank of India (SBI) since 2001. The account of ABG Shipyard turned non-performing asset (NPA) on November 30, 2013, as per SBI, it said.
As per the complaint bank, the NPA is to the tune of Rs 22,842 crore and the majority of the disbursement happened between 2005 and 2012 by a consortium of 28 banks led by ICICI Bank, including SBI.
The account was restructured under the corporate debt restructuring (CDR) mechanism on March 27, 2014. However, the operations of the company could not be revived. On September 10, 2014, NV Dand & Associates was deputed to conduct a stock audit of ABG Shipyard Ltd.
The audit firm submitted its report on April 30, 2016, and observed various faults on the part of the accused company. Subsequently, the account of ABG Shipyard Ltd was declared NPA on July 30, 2016 with effect from November 30, 2013.
In keeping with a 2014 policy, red-flagging suspect accounts, and making CMDs liable, a forensic audit was initiated based on the lenders’ decision in the joint lenders meeting dated April 10, 2018. Audit firm Ernst & Young LLP was appointed as forensic auditor in the matter which audited the company’s accounts for the period 2012-2017.
ABG Shipyard was also referred to NCLT, Ahmedabad on August 1, 2017 by ICICI Bank, being the lead bank, for corporate insolvency resolution process (CIRP).
Between April 2019 and March 2020, various banks of the consortium declared the account of ABG Shipyard as fraud. The fraud is primarily on account of huge transfers by the company to its related parties and subsequently making adjustment entries. It is also alleged that huge investments were made in its overseas subsidiary by diverting the bank loans and funds were diverted to purchase huge assets in the name of its related parties.