CBI books PFS Shipping for ₹163 crore for bank fraud

The CBI has charged PFS Shipping India Ltd, formerly known as ABG Shipping Ltd, and its three directors for allegedly causing a 163.80 crore loss to a syndicate of banks.

Following a complaint by the Bank of India on March 16, the CBI filed FIR against the directors of PFS – Ashok Kumar Agarwal, Kamlesh Kumar Agarwal and Dhananjay L Datar – amid allegations that the company failed to pay regular installments and interest loans received from the bank to pay consortium of three banks. In addition, the directors, in connivance with others, have “committed criminal acts of embezzlement and dishonest conversion of funds for their ill-gotten personal gains.” The three had, with dishonest and fraudulent intent, forged and fabricated many documents, created false and fictitious entries and passed off frivolous documents as genuine in order to defraud the banks, the CBI FIR read.

They tried to dispose of the bank guarantee and willfully divert bank funds to their other facilities at home and abroad, the agency claimed. Last year, the CBI also registered a ₹22,842 crore case against ABG shipyard for bank fraud.

The scammed banks were led by the Tokyo branch of Bank of India and included Canara Bank London branch and Syndicate Bank Singapore branch.

The forensic audit conducted by MK Agarwal and Co on September 9, 2019 indicated that the company had transferred a significant amount to its subsidiaries and its account was declared NPA for late payment as early as March 31, 2014, the agency said.

The actions of the defendants constitute an offense of criminal conspiracy, fraud, fraud, forgery, use of false documents to embezzle funds and criminal breach of trust.

Based in Mumbai, PFS is engaged in the business of owning, operating and chartering ships in India. According to the complaint to the CBI, ABG Cement Ltd (ACL), a group company, built a greenfield coastal cement plant with a total cement capacity of 5.8 million tonnes per year.

In order to reduce the transportation costs of transporting the finished clinker from the Bhuj plant to the Surat plant, both in Gujarat, for cement grinding, the ACL hired PFS to operate on the coast.

Under an agreement, the PFS was approved for a US$76.50 million syndication loan under the ECB route by the Tokyo branch of the Bank of India, the London branch of Canara Bank and the Singapore branch of the former Syndicate Bank , which has since merged with Canara Bank.

Of the total loan requested, the Bank of India disbursed $10.75 million of its $23.25 million share in 2012.

The forensic examination revealed that the company did not buy new ships, which was one of the conditions of the loan, and instead used its old ones for business.

It also emerged that PFS Shipping India Ltd made a huge investment of ₹1,012.50 crore in its subsidiary M/s Varada Marine Pvt Ltd up to FY2013-14. Varada, registered in Singapore, was also liquidated.

“M/s PFS Shipping India Limited has redirected the funds of ₹1,012.50 crore to its related company and disbursed the funds outside of India and the sale of shares valued at ₹514.92 crore has been settled against the payable liabilities of the Group customized by companies,” the CBI claimed. The total diversion of funds amounts to £1,527.42 million, the agency said.

The agency also stated that PFS has invested in its other subsidiary, PFS Offshore Private Limited, in the amount of ₹260.80 crore as of FY13-14 through equity, preference and application monies. This amount was also taken out of the country.

Similarly, it also diverted small amounts to two of its other corporations — Western India Shipyard Ltd and Atlanta Shipping Ltd, the CBI said.

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