People who knew him well say Rishi Agarwal, despite his unassuming manners, knew how to get the job done by hook or by crook – more of the latter perhaps, as subsequent developments suggest. After months of questioning, Agarwal is now in the custody of the Central Bureau of Investigation (CBI) on charges of defrauding banks to the tune of Rs 22,800 crore. In the process, he has earned the dubious distinction of beating Nirav Modi as India’s biggest bank loan scamster.
His acquaintances (friends have long deserted him) say the 56-year-old who studied finance at Purdue University, had a shrewd mind and a gift of the gab that helped him win friends and influence people and become a first generation entrepreneur, owning what was once India’s largest private sector shipyard, ABG Shipyard. The family pedigree must have helped in his once stupendous success – Agarwal is a nephew of Shashi and Ravi Ruia of the Essar Group. His LinkedIn profile describes Agarwal as being ‘extremely passionate about ships and shipbuilding’. Somewhere along the way the passion of taking the shortcut to success seems to have got the better of him, going by the CBI charge sheet.
The road to a dizzying pace of his initial success started in 1985 when Agarwal bought a small shipbuilding facility in Gujarat, Magdala Shipyard. From 1990, over a decade, his firm built over 165 ships, a majority of them for clients in Europe and Asia. In 2000, ABG got its first government order to build two inceptor boats for the Coast Guard. In 2011, it secured a licence to build ships, including submarines, for the Indian defence sector. ABG soon became India’s number one shipbuilder, with an order book of Rs 16,000 crore in 2012.
The cookie, however, started crumbling after that with a global slowdown leading to several of its clients cancelling their orders. During the previous boom for global shipping in 2006-07, ABG had won many orders, riding on a subsidy scheme extended by the government to local yards. Indian yards tapped global fleet owners, who were looking to place orders at newer destinations as yards in South Korea, China and Japan could not take more contracts in the face of an ordering glut.
In fact, days before the subsidy scheme ended on August 14, 2007, after a five-year run, ABG booked many orders worth millions to take advantage of the scheme. Many say some of these shipbuilding contracts were speculative orders booked by friendly fleet owners, related parties or group companies in India and overseas. Many of these ships were never built.
The cancellation of orders spelt the beginning of the company’s downfall and according to CBI, Agarwal started diverting loans from a consortium of 28 banks, including State Bank of India and ICICI Bank to its overseas subsidiaries, for buying assets in affiliated companies and for transferring money to related parties. This was also corroborated by the forensic advisor Ernst & Young (EY) when it scanned the company’s books of accounts between 2012 and 2016. The ABG saga also showed complete governance failure. Auditors and independent directors jumped ship without raising any red flags.
When the going was good, Agarwal gave quite a few glimpses of his shrewd and ruthless mind. A shining example of that was his battle with Bharati Shipyard for acquiring control of Great Offshore, a supplier of rigs used in offshore drilling and an arm of the Great Eastern Shipping Company. Agarwal placed an unsolicited bid for Great Offshore as a counter to an ongoing open offer from Bharati Shipyard, making the business world sit up and take notice. After jacking up his offer price multiple times to buy stake from public shareholders of Great Offshore, Agarwal eventually withdrew from the race in the final lap, making the deal costlier for the promoters of Bharati Shipyard.
The ABG case was registered almost a decade after the alleged fraud began and three years after “criminal breach of trust” was pinpointed by EY, leading many to say that it is yet another example of Agarwal’s connections with the right people at the right time. But those connections seem to have reached their expiry date as the long arm of the law has finally caught up with him.