New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said no public sector bank employees were found to be involved in the Rs 14,349 crore bank fraud by ABG Shipyard Ltd (ABGSL), and CBI has registered a case against the company and its directors last month. ABG Shipyard was sanctioned loan under consortium arrangement led by ICICI Bank, and the account was declared as non-performing asset (NPA) by the lender banks in August 2013 and afterwards, Sitharaman said in a written reply to the Rajya Sabha. The loan to the company was later approved for restructuring under corporate debt restructuring (CDR) in March 2014 by CDR empowered group.
Sitharaman said that post-failure of the CDR and classification of the account as NPA, the lender banks appointed EY to conduct a forensic audit of the company. The agency had submitted the forensic audit report (FAR) in January 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 banks on April 25, 2019, she said.
"As per input 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," Sitharaman said. The minister also informed that a complaint with the Central Bureau of Investigation (CBI) was filed by the State Bank of India (SBI) on November 8, 2019, and subsequently, in a meeting of the joint lenders in January 2020, it was decided that SBI should file the complaint on behalf of all consortium lenders.
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"Accordingly, the mandate was garnered from all banks, with the last mandate being received on August 25, 2020. SBI filed the revised complaint with CBI on August 25, 2020, and the final complaint, based on further discussions, was filed on December 14, 2020," she added. Sitharaman said the CBI has registered a first information report (FIR) against the company and its directors on February 7, 2022.
Replying to a query in Rajya Sabha, Finance Minister Nirmala Sitharaman said there was no delay by the Centre in taking action after identification of fraud by the State Bank of India following the forensic report from Ernst & Young.
The minister also took a dig at the previous UPA government and said eight times money was given to ABG Shipyard, a company that was going through restructuring. "There was not one credit enhancement after 2014," she said, adding it is the "biggest fraud perpetrated". Sitharaman's reply came in support of Minister of State for Finance Bhagwat Karad, who was replying to a question from SP member Sukhram Singh Yadav, over delay in the CBI investigations in the ABG Shipyard matter.
Taking a dig at the previous UPA government, Sitharaman said in 2014, when the last 42.6 per cent increase is given to an organisation that was going to corporate debt restructuring. While defending Karad, she said: "He was trying to say from one year to another year to the third year to the fourth year, till 2014, eight times, if restructuring happens and every time, there is an enhancement of money is being given."
"He has only tried to highlight the fact between 2005-06 till early 2014 periodically increasing the amount was happening and to the extent the last one which happens, in early March 2014, 42.6 per cent increase was given by the banks," Sitharam said. While replying to a question about what steps the government is taking so that such incidents are not repeated, she said in this particular case, there is not a single credit enhancement after 2014, when NDA came into power.
"In this particular case, there is not one credit enhancement after 2014 when eight times money has been given for a company which is under restructuring. That itself is the biggest fraud perpetrated and unfortunately, I am with my MoS, I am to say prior to 2014," she added. While BJP member Sushil Kumar Modi asked the name of the state which had delayed the investigations by CBI, which even filing of a final complaint by SBI on December 14, 2020 took 14 months to file FIR in the matter.
Modi wanted to know as to whether some state governments, which had withdrawn their consents for CBI investigation in their state, had delayed giving approval for that. Replying to it, Karad said: "CBI has to consent from some states which had withdrawn its power to investigate. CBI has to take permission in those states and hence delay was caused. That is one of the important reasons for delaying the enquiry. Maharastra is the number one state and there are two more states which I would tell later."
The CBI was doing an inquiry, Karad said, adding it has taken action immediately after the fraud was declared. According to inputs received from banks, Karad said the mandate was garnered from all banks, with last mandate being received on August 25, 2020. "SBI filed the revised complaint with CBI on August 25, 2020, and the final complaint, based on further discussions, was filed on December 14, 2020. CBI has registered a First Information Report (FIR) against the Company and its directors on February 7, 2022," the finance minister said.
Yadav also wanted to know the action taken against the officials, who had neglected the probe. Karad said 24 banks had provided a total loan of Rs 14,350 crore to ABG Shipyard which included 10 banks from the public sector, five from the private sector, five from financial institutions and two foreign banks. The lead bank was ICICI Bank. "The loan given to this company in 2005-06 was Rs 1,547 crore when there was UPA government. After that from 2006 to 2014, eight times loans totalling Rs 18,800 crore were provided and that time it was UPA government," he added. This was objected to by Congress member and leader of opposition Mallikarjun Kharge.
While Priyanka Chaturvedi of Shiv Sena said fraud in the ABG Shipyard matter was declared in April 2019 and the first FIR was lodged on February 7 this year. "Why there was so much delay and whether the reason was that the Gujarat government was protecting them," she asked. On this, the finance minister, who was present in the upper house, intervened and said though ICICI was the lead bank of the consortium several public sector banks had also granted loans to ABG Shipyards.
As many as 27 banks and financial entities were engaged in the consortium lending to ABGSL at the time of loan arrangement, including the erstwhile banks: Oriental Bank of Commerce (OBC), Syndicate Bank, Dena Bank, Andhra Bank and Laxmi Vilas Bank. The top lenders with the highest amount of exposure to the company are: ICICI Bank Rs 7,089 crore; IDBI Bank Rs 3,639 crore; SBI Rs 2,925 crore; Bank of Baroda Rs 1,614 crore; Punjab National Bank Rs 1,244 crore; Exim Bank Rs 1,327 crore; Indian Overseas Bank Rs 1,228 crore; Bank of India Rs 719 crore; Standard Chartered Bank Rs 743 crore.
Erstwhile Oriental Bank of Commerce, now merged into PNB, had an exposure of Rs 714 crore; Syndicate Bank (now Canara) Rs 408 crore; Dena Bank (now BoB) Rs 406 crore; and Andhra Bank (now Union Bank of India) Rs 350 crore. Among others, IFCI loaned Rs 300 crore, SBI Singapore Rs 458 crore; and SICOM Ltd Rs 260 crore.
Touted as the biggest bank fraud case, the CBI had booked ABG Shipyard Ltd and its former chairman and managing director Rishi Kamlesh Agarwal along with others for allegedly cheating a consortium of banks on February 14, 2022.
PTI
