The Central Bureau of Investigation said on Tuesday that lookout circulars have been issued against the accused persons in the ABG Shipyard bank fraud case. A lookout circular is issued to stop any person wanted by the law enforcement authorities from leaving the country via airports and border crossings.

The case pertains to the alleged defrauding of a consortium of banks to the tune of Rs 22,842 crore by Gujarat-based shipbuilding company ABG Shipyard. The CBI had filed a first information report in connection with the matter on February 12. This is reportedly the biggest bank fraud case that the agency has registered.

The CBI has booked the company’s former Managing Director Rishi Agarwal, Executive Director Santhanam Muthuswamy, and directors Ashwini Kumar, Sushil Kumar Agarwal and Ravi Vimal Nevetia in the case. They have been charged with criminal conspiracy, cheating, criminal breach of trust and abuse of official position.

In a statement on Tuesday, the central agency said that the fraud was related to huge transfers by the shipbuilding company to its related parties and subsequent entries in the books to adjust for the discrepancies.

“It is also alleged that huge investments were made in its overseas subsidiary by diverting bank loans,” the CBI claimed. “The critical period of the investigation is 2005-2012.”

The statement noted that the bank account of ABG Shipyard had been earmarked as a non performing asset in November 2013, according to a complaint by the State Bank of India. The bank had been conducting business with ABG Shipyard since 2001.

The CBI said that the company had been restructured in March 2014, but could not revived. In October 2014, accounting firm NV Dand and Associates were asked to conduct a stock audit of the company.

In its report submitted in 2016, the accounting firm flagged various faults on the company’s part, following which ABG Shipyard was declared a non performing asset with effect from November 2013.

The State Bank of India filed a complaint with the central agency in November 2020 to look into the alleged bank fraud, CBI said. Between April 2019 and March 2020, various banks of the consortium also declared the account of the ABG Shipyard as fraudulent.

“In the instant case, there are 28 banks involved in consortium with huge amount of disbursement,” the agency said. “There were different nature of bank loans including CC [cash credit] loan, term loan, letter of credit, bank guarantee etc, that were given as advance by the banks.”

The agency said that it had conducted searches at 13 locations on February 12 and seized several incriminating documents such as purchase and sales details, share registers, contract files, minutes of Board meetings, among other things.

The central agency also said that the withdrawal of general consent for CBI investigation by some states have made the registration of bank fraud cases more difficult.

“There are around 100 high value bank fraud cases that could not be registered due to non- accordance of specific consent u/s [under section] 6 of DSPE [The Delhi Special Police Establishment] Act by state governments where the general consent has been withdrawn,” it said.

Without the general consent, the agency has to approach the state government on a case-to-case basis, seeking permission to conduct an inquiry. At least eight states – West Bengal, Maharashtra, Kerala, Punjab, Rajasthan, Jharkhand, Chhattisgarh and Mizoram – have withdrawn the general consent for allowing the central agency to conduct inquiries.

ABG’s shipyards are located at Dahej and Surat in Gujarat. The firm has built more than 165 vessels in the past 16 years, including specialised ones like newsprint carriers and self-discharging and loading bulk cement carriers.