Indian Shipyard Exec Arrested in $2.8B Bank Fraud Case
The former head of Indian shipbuilder ABG Shipyard has been arrested on charges of engaging in a record-setting bank fraud scam.
Rishi Agarwal, the former chairman and managing director of ABG, stands accused of borrowing $2.8 billion for corporate purposes, then disbursing the money to affiliated companies for personal gain. An audit performed by Ernst & Young found evidence of a long-running fraudulent scheme from 2012-17 involving "diversion of funds, misappropriation and criminal breach of trust." It is the largest bank fraud case in India's history.
Several ABG officers, including Agarwal, allegedly sought loans from 28 banks and transforming the borrowed money into personal wealth through a network of 98 related companies. ICICL, which led the bank consortium supporting the yard, is allegedly owed about $860 million.
“Agarwal was called for questioning on Wednesday at the CBI headquarters during which the investigating officer suspected that he was not co-operating in the probe and was evasive in responses, following which he was arrested,” an Indian Central Bureau of Investigation (CBI) spokesperson told Indian Express.
Over the course of the period in question, ABG fell behind on interest payments and had to work out a restructuring agreement with its creditors, which it then defaulted on. It was identified for bankruptcy proceedings by the Reserve Bank of India in late 2017, and its assets are being frozen and auctioned off.
The asset-disposal process is well under way. On Friday, Welspun Corporation won an auction for ABG's property at Dahej, Gujarat. It paid 659 crore plus taxes for 160 acres of yard space and about 150,000 tonnes of obsolete ships and scrap. In total, the Indian finance ministry's Enforcement Directorate has frozen land and other assets valued at a total of about $340 million in connection with the case.