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ABG Shipyard Case: CBI Probe Delayed By Some States Including Maharashtra, Says Govt

Finance Minister Nirmala Sitharaman said there was no delay by the Centre in taking action after identification of fraud by the State Bank

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ABG Shipyard has been alleged of Indias largest banking fraud accounting for Rs 22,848 crore.

The government on Tuesday said investigations in the ABG Shipyard case were delayed because some state governments including Maharashtra had withdrawn the agency's power to probe and their approval for the case came much later.

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.

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.

"There was a forensic audit report which was received by SBI, which was done by Ernst & Young and that was submitted in January 2019," she said.

Banks have an institutional way of going through forensic audit reports and that fraud identification committee in SBI took five months over it.

"I would not want to say that it was delayed there at that point of time," she said adding five months later on June 19, 2019, they recognised it as fraud. 

SBI has given the whole detail to the Central Bureau of Investigation (CBI) on November 8, 2019.

"Again this is within four months, they have gone to CBI to say file the case. SBI has been moving from January to June to November within 2019 to make sure that the case is handled and after that SBI's case has been pursued from November 8, 2019," the minister added.

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. 

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