Bank fraud: ED files money laundering case against ABG Shipyard, its former directors

New Delhi: In a key development in ABG Shipyards loan fraud case, the Enforcement Directorate on Wednesday filed a money laundering case against the ship building company and its former directors.

The case was lodged on the basis of the FIR filed by the CBI in which it accused the company and its directors of defrauding a consortium of banks to the tune of Rs 22,842 crore.

This is reportedly the biggest bank fraud case that the Central Bureau of Investigation has registered.

The ED had asked the CBI to hand them over the relevant documents connected to the case, and initiated its probe into the matter.

After conducting a preliminary probe and taking legal opinion, the ED decided to lodge a PMLA case.

Now, the ED can summon the Directors to join the investigation to record their statements before their officials.

In the case, there are 28 banks involved in the consortium with huge amount of disbursement to the company in the way of CC loans, term loans, letters of credit, bank guarantee etc. that were given as advance by the banks.

The fraud is primarily on account of huge transfer by ABG Shipyard Ltd to its related parties and subsequently making adjustment entries. It is also alleged that huge investment were made in its overseas subsidiary by diverting the bank loans and funds were also diverted to purchase huge assets in the name of its related parties.

ABG Shipyards took loan of Rs 1,228 crore from the Indian Overseas Bank, Rs 1,244 crore from the Punjab National Bank, Rs 1,614 crore from the Bank of Baroda, Rs 7,089 crore from the ICICI Bank and Rs 3,634 crore from the IDBI Bank and then defaulted.

Initially the banks initiated an internal inquiry in which it was found that the company was cheating the consortium by diverting funds to different entities.