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The Largest Banking Scam in History – The ABG Shipyard Case

ABG shipyard is a Gujrat-based company that did a fraud of $3,018,900 from the banks. According to the Central Bank of Investigation (CBI), the company has been taking loans from the banks since 2015, however, due to the unavailability of capital in their business assets, they could not repay the loans. Thus, the account turned into non-performing assets (NPAs) due to the non-payment of dues by the company in 2013. 

There were 28 banks, including State Bank of India (SBI), IDBI, and ICICI, who were tricked and lured into the trap in order to accomplish the unethical task of the company. Later in 2019, SBI identified the fraud and filed a complaint on November 8, 2019. It was uncovered during the investigation that they were investing the loans in other companies taken by the banks rather than stabilizing their own company. Thus, a separate money laundering case was also started to be investigated against the company.

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The Challenges They Were Facing?

The parties or the companies linked with the ABG shipyard invested and purchased the property and land from the provided fund. The properties were purchased without keeping ABG shipyard company liable, out of security. Further, politics was involved in it as Modi’s government was being held responsible.

The Solution of This Fraud Case?

The fraud case was identified early in 2019, yet the filed complaint was pretty late by November. Thus, the indication that the government is involved in order to protect the people of Gujrat spread like a fire in the forest, becoming a big controversy. However, the banks did a good job of identifying fraud in lesser time. 

The actions against fraud are to be taken immediately to prevent greater loss.

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The Insider View of A Banking Scam

Banking is a crucial financial asset for safety and keeping institutions. Personal and business operations are very much dependent on the operations of banks in order to exchange money. The businesses send and receive the money for business purposes, while the employees are also paid for their work through online transactions. Further, people keep their money in banks to prevent it from being lost. However, banks are not the safest place anymore. Banking scams are frauds, illegal and unethical ways of obtaining and getting hold of people’s assets, money, and other properties. Banking scams are considered white-collar scams as it is pretty difficult to identify them and protect them from them when they are scammed. 

The scammers’ in a very convenient and approachable way put forth several deals in front of the users, that may include cash prizes, doubling of profit, and investments in the businesses. Thus, the naive and unaware victims take the deal and welcome trouble for them. The never-ending loop of trap begins and it doesn’t end easily. The scammer makes them, the victims, share their personal details such as bank accounts, access to personal assets, and the security codes of the financial institutions which they later use for the purpose of accomplishing their unethical and illicit goal.

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The Company Which Stole $3,018,900+ and Almost Got Away With it!

ABG Shipyard is a Gujrat-based company with 16 years of experience in building over 165 vessels. It is part of the ABG group of companies dealing with different departments and interests. The company was established in 1985 with its main operations being run in Mumbai headquarters. The Shipyard department operated in Surat and Dahej with forty-six ships for the purpose of export. In addition to that, they also have repairs and maintenance facilities in India, particularly in Goa.  It became the largest company in the sector of the shipyard as it has a capacity to manufacture vessels up to 20 tonnes in weight.

The company produces a wide range of commercial vessels, from self-loading products to self-discharging products. The ABG company was also assigned the contract to build warships and vessels for the Indian Navy. They were even awarded $130 million to build cadet training ships for the Indian Navy. Their business was pretty extended and spread around with a vast amount of opportunities and business. Yet, despite a well-known reputation and a successful operation of the business in the shipbuilding industry, they chose greediness and started performing illicit activities to generate more money and wealth.

ABG shipyard

The ABG Groups of the company’s shipyard business took loans from 28 different banks, as they possess a good reputation in the business sector, so the banks easily gave them the loan. Thus, later due to a deficit in financial statements, they were unable to repay back the loans to the banks which resulted in owing $3,018,900+ from different banks, which even included the State bank of India (SBI). On the basis of non-payment dues, the company’s account turned into non-performing assets (NPAs) in 2013. The SBI discovered the fraud in early 2019, however, they filed a complaint on November 8 of 2019.

What Happened During The Scam?

This case study is about what is known to be the biggest scam in India. A well-known and famous company is known as ABG group of companies, those who run business in multiple sectors and departments along with making a huge profit. The company was known for its reputation and was pretty successful in its business. The business was widely spread with forty ships allocated for the purpose of exports.

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Not only this, the government entered into a contract with them to manufacture ships and trunks for the Indian Navy, which is considered to be a huge opportunity for them. The government even gave them 130 million for the purpose of building the Indian military’s training ships. The business of the ABG Shipyard was going pretty smoothly and successfully until they got into a scandal that exposed their illicit activity of generating money by disobeying the rules and regulations. The government was also targeted for supporting them and providing them with more opportunities as the public and media associated the personal connections of the ABG group of companies with Modi, the reason being the same city Gujrat.

If you experienced a similar banking scam to your business then contact us to help you get your moneyback!

Some Believe They Were Trained Professionals!

The company took an immense amount of loans from 28 different banks, the amount they owed to those banks was near INR 23000 crore. The ABG company created a web of transactions to deceive and trick the banks, making them release loans due to their well-known reputation in the business sector. The banks they trapped to generate money also included the State bank of India (SBI) which is considered to be the national bank and the biggest bank in India. However, the company did not hesitate to take a risk and put itself in bigger trouble by messing with the strongest administration and securely backed-up bank.

The ABG Shipyard company very cleverly took each and every step making sure they would be saved and can be back by the profits they will receive. Following the strategy, they took loans from different banks instead of spending that money to stabilize their own company’s financial position. They went against the law and invested the loan money abroad, they bought the properties and assets in the name of affiliated companies and transferred the money they took as a loan to several related parties, either for the purpose of investment or for the purpose of buying assets in their name. Thus, the ABG company itself was not to be held liable for the properties they purchased according to the contract, they excluded their company’s security.

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In 2013, it was reported that they violated the terms of Corporate Debt Restructuring (CDR), a relief given to the companies by either reducing their interest rates or by giving them additional time to pay back the loan. Thus, being a Non-Performing Asset (NPA) company, which their account became on 30 November 2013, they were strictly supposed to obey the rules and the regulations, they were obliged to stick by the law set by the banks and the authorities. 

However, they violated the terms to which they were bound, resulting in attracting the attention of the authorities and the public. State bank of India (SBI) identified their fraud in 2019, despite them taking the loan and performing their illicit and unethical work to get closer to their goal, in other words, to make a maximum profit or generate a huge amount of money from 2015. The case was identified pretty late, which raises the question of how it remained undetectable and unidentifiable for a pretty long time.

Even though the SBI identified that fraud at the beginning of 2019, they reported it in November, which caused the case to be dragged and delayed providing them the opportunity to prepare to cover their illicit and unethical work. Additionally, the delay in the scam detection made them expand their web and group which caused the loss to be greater than it was supposed to be. After the filed complaint in 2019, another fresh complaint was also filed in 2020 which called the directors and CEO of the ABG group of companies to answer the raised questions and about the activity, they have been accused of. The documents regarding their business were recovered and taken under the control of investigating authorities.

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Investigations Which Were Carried Out

The authorities conducted the forensic audit to get a better view and grasp a better understanding of the case by considering ABG Shipyard company’s activities between April 2012 and 2017. The forensics proved that the scam took place during this time period, they cleverly lured the banks into their trap. The company was able to escape the accountability of the trapped they set back from 2012 to 2017, however, they were not able to run away for a long span of time. The recovered documents of the ABG Shipyard company’s business activities were used as evidence to prove their unethical and secretly carried out a plan to increase their financial assets. They not only owe banks within India but also involve overseas banks to accomplish their plan of making money in an unethical manner.

What Were The Main Causes of This Scam?

This all started with the downturn of the company back in 2015, when the ABG SL constructed over 165 vessels which also included the construction of specialized vessels, self-discharging, and loading of bulk cement and other products. However, the company had to face a bad fall due to the no demands of their manufactured vessels in the market, resulting in their invested money going to waste, and an immense increase in the loss of the company. The company found it very difficult to stick by the Corporate Debt Restructuring (CDR) terms, the company started failing in paying back the loan amount in installments along with being unable to service the interest on the due dates.

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Thus, after failing to fulfill the terms of Corporate Debt Restructuring (CDR), the accounts were declared Non-Performing Asset (NPA) in 2016 again after 2013. The company since disobeyed the law so all the cash was to be recovered by retention of the bank accounts and blocking the transactions which take place on the behalf of the company. The company was cornered from all ends to make sure the scammed money could be recovered. 

The banking scam is the biggest threat to one’s financial assets.  The ones who get scammed are less likely to recover the money unless the authorities and officials help them get back the money. Therefore, our company, Fund trace works to help people recover from their losses and justice get served. One should contact their bank immediately after the scam takes place and demand a refund. We, as a helping hand to our customers, make sure that the banks have all the details which pursue them to refund the money. Further, after filing a complaint, we utilize our experts to carry out a legal fight, in addition to that, we also use technological skills to get hold of scammers’ accounts.

Get Your Hard Earned Cash Back!

The bank scam is difficult to identify and a massive loss for the victims at the same time. Our company can help customers identify the scam as well as gather the relevant information required for taking action. Get more information on bank scams to protect yourself. Visit our website!

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