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.
