According to sources close to the investigation, EY will likely be a crucial prosecution witness in the case against ABG Shipyard, which has been charged by the CBI with defrauding banks of over Rs 22,482 crore.
The London-based professional services firm conducted a forensic audit of ABG Shipyard and submitted its findings in January 2019 to a group of 28 banks that were allegedly duped by the Surat-based shipbuilder in the country’s largest country scam.
In November 2019, a Mumbai branch of the State Bank of India petitioned the CBI, requesting the filing of a corruption case based on the audit report.
The agency, on the other hand, returned the complaint to the bank, asking for more information. The agency also requested a list of witnesses from SBI Mumbai. In a new complaint filed in September 2020, the bank named EY and the general manager of its Mumbai branch as prosecution witnesses.
According to sources close to the investigation, the audit report will be studied, and officials who conducted the audit may be questioned by the CBI.
The audit report will also be evaluated to see if any lapses were detected, according to the sources. “The agency will select who will be called as a witness based on the facts and the involvement of individuals involved,” one of them added.
EY has noted “possible circular transactions,” violations of corporate debt restriction (CDR) granted by banks in 2014, and “potential diversion” of funds by ABG Shipyard in its audit report, a portion of which was replicated in CBI’s FIR.
One of the banks was “potentially diverted” to two entities related to ABG Shipyard, including a Singapore-based company, according to the audit report. The audit also mentioned “indications of assets purchased by related/linked parties” with ABG Shipyard funding.
According to the report, “it appears that properties were purchased out of security deposits made by ABG Shipyard Ltd during the same year” based on a review of financial documents for seven firms for the financial year 2007-08.
Top bank executives are considered public servants. Their possible involvement is significant because the complainant bank told the CBI that it has no reason to believe its employees were involved in the crime.
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