Mrs. Chanda Kochhar’s actions are in conflict with the interest of the ICICI Bank and deserve to be strictly dealt with by the RBI.
While it is commendable that the Srikrishna committee indicted Chanda Kocchar and recommended a clawback of all bonuses from April 2009 to 2018, there is a lingering malaise that still afflicts Indian companies. While all these shenanigans were happening, what was the Board doing? Why did it do a sham job of appointing a new Chairman, Mahendra Kumar Sharma, who gave Kochhar a hasty vote of confidence? While it is murmured that a few in the Board were dissenting, the overall impression it gave was that everything was right with ICICI and this was a mere passing cloud. Was it? More importantly, it’s not Chanda Kocchar that was the “sole proprietor” of the Bank, isn’t the Bank and its various Committees that sanction advances and take decisions, comprised of eminent Board Members? What happened to their spine and their mental faculties?
SEBI, MCA and DFS (Dept of Financial Services, GOI) must ensure that all other Board Members, who were party to these decisions, should be classified an “unfit” and disqualified to be on Boards of other Banks and Companies
Arvind Gupta, ICICI Whistleblower
It all started with a vigilant shareholder of ICICI Bank and Videocon, Arvind Gupta, who wrote to the Prime Minister on Mar 15, 2016, questioning the illegal relationship between Videocon Group and Nu-Power Renewable Group, steered by the Deepak Kochhar, the husband of Chanda Kochhar.
For two years, nothing happened. Then, PGurus published a detailed article on the investigation of probe agencies which were looking into the misuse of office by Chanda Kochhar. The saga, as described by Arvind Gupta, is sordid:
“In April 2012, just after complete transfer of ownership and control of NuPower Renewables to Kochhar’s family the ICICI Bank extended Rupee loan to various private companies belonging to the Videocon Industries Limited to the tune of Rs. 3,250 crore as per the break-up given below:
|Rupee Loan of Rs. 3,250 crore to the Promoters of Videocon Group by ICICI Bank|
|Name of the Company||Date of ICICI Bank funding||Amount of loan in Rs. Crore|
|Trend Electronics Limited||30.04.2012||650|
|Century Appliances Limited||30.04.2012||650|
|Value Industries Limited||30.04.2012||650|
|Evans Fraser & Company India Limited||30.04.2012||650|
In addition, the helping hands of the ICICI Bank extend overseas destinations as well. The ICICI Bank extended offshore funding amounting to Rs. 660 crores to another foreign entity owned by the Videocon Group.
A Videocon Group Company based in the Cayman Islands namely Tuskar Overseas Inc. was also funded by ICICI Bank Ltd through its UK and Canada branches with a massive sum of Rs. 660 crores. The said the offshore loan was backed by guarantees given by six Indian Videocon Group firms including Tek Care India Pvt. Ltd, Shree Dhoot Trading and Agencies Ltd, Value Industries Ltd and Trend Electronics Ltd.
Sir, round tripping foreign investments in Indian corporates have been a subject of a curious investigation to unearth a host of scams perpetrated by the Congress-led UPA Government. It is against this background that the Bank funding provided by the ICICI Bank to Videocon Group assumes significance. The above said banking transaction reflects a deep-rooted conspiracy on the part of ICICI Bank’s lending arrangement with the Videocon Group. Such transactions constitute an Indian private sector Banking scam.
Evidently, Mrs. Chanda Kochhar facilitated this unscrupulous domestic offshore funding in abuse of her position as the CEO & MD. Chanda Kochhar’s greed of making private gains by corrupt means has resulted in wrongful losses to the ICICI Bank and the ICICI Bank’s future is in a precarious financial condition. There is a serious risk of sticky loans extended to groups like the Videocon promoted by Venugopal Dhoot becoming NPA’s with the ICICI Bank. Mrs. Chanda Kochhar’s actions are in conflict with the interest of the ICICI Bank and deserve to be strictly dealt with by the RBI.
Furthermore, during the period between December 2010 and March 2012, NuPower Renewables also received large overseas funding aggregating to Rs. 325 crore in the form of compulsorily convertible preference shares (CCPS) from an obscure Mauritius based entity named Firstland Holdings Limited. Later in 2014, the above funding was shifted to another Mauritius based entity named DH Renewables Holding Limited.”
What should SEBI do?
For far too long, SEBI has been looking the other way as many Public Limited companies have done pretty much what they please. The long-suffering shareholder does not even have a clue of the real owners of this bank. SEBI should:
- List the real names behind each shareholding in ICICI. No more hiding behind shell corporations and opaque entities.
- Make each and every Board member accountable too, for his or her actions in allowing this scam to go on for so long. Institute clawback provisions and ensure that these individuals are prevented from being on any board until this investigation reaches its logical end. In fact, more important than Chand Kocchar, it is the collective Board and the Committee that sanctions these dubious loans are responsible. In no Bank, only the CEO and MD can sign off and ensure disbursal of such a large loan amount. All other Board Members are complicit and thus very clearly unfit to be on Boards of other companies.
- SEBI, MCA and DFS (Dept of Financial Services, GOI) must ensure that all other Board Members, who were party to these decisions, should be classified an “unfit” and disqualified to be on Boards of other Banks and Companies.
Will SEBI, RBI and Fin Min act? Only time will tell.
Justice Srikrishna panel indicts Chanda Kochhar, ICICI Bank sacks her – Jan 31, 2019, Economic Times