Bharat Jhunjhunwala
ABG Shipyard was an internationally prominent shipbuilder. It had built 165 ships in the last 16 years of which 46 were exported. The Company was ranked high by international rating agencies like Lloyd’s, Bureau Veritas, American Bureau of Shipping and others. It was known for its good quality products. This shows that the Company was fundamentally strong. However, the 2008 global financial crisis led to a change in the fortunes of the Company. The demand for ships declined and the Company gradually slipped into losses. The loan taken by the Company were classified as Non-Performing Assets (NPAs) by various banks in 2013. The statutory audit report of 2016 mentioned that the Company was incurring heavy losses and was facing a number of court cases by its vendors but it also said that the Company had been transparent about its dealings and had made the required disclosures in its balance sheet. It gave no indication whatsoever of a scam. It was only in 2018 that meeting of the lending banks decided to order a forensic audit to uncover any possible wrongdoing. Global consultancy firm Ernst and Young (EY) was appointed as the forensic auditor. EY gave its report in January 2019 and disclosed that certain scam had taken place. Directors of the Company had diverted some of the loans through their overseas subsidiaries to their personal accounts. However, much of such diversions is not…
