On Thursday, the CBI booked former ICICI Bank CEO and MD Chanda Kochhar on charges of criminal conspiracy, cheating and abuse of official position for dishonestly sanctioning loans to the Videocon group.
India Today reported that the investigative agency is likely summon Kochhar, her husband Deepak Kochhar and the Videocon Group MD Venugopal Dhoot as a result of the fresh FIR. Furthermore, senior ICICI bankers are likely to be summoned to investigate their role in the cheating case.
What does the new FIR say?
According to the new FIR, Kochhar received illegal gratification through her husband, Deepak Kochhar, from Videocon MD V.N. Dhoot for sanctioning a term loan of Rs 300 crore to Videocon International Electronics Ltd. Furthermore, the Economic Times reported that her alleged role in influencing disbursal decisions in relevant committees of the bank has been brought under the scanner.
CBI is investigating allegations of quid pro quo in the loans granted to Videocon by ICICI Bank. It is arguing that Kochhar, through her husband Deepak, benefited from approving a loan to Dhoots Videocon.
The FIR has been registered under Sections 120-B r/w 420 of the Indian Penal Code with Section 7, Section 13(2) r/w 13(1)(d) of the Prevention of Corruption (PC) Act.
Who else has been named in the FIR?
The CBI has also registered a case against Deepak Kochhar and VN Dhoot. It also mentioned unknown public servants in the FIR.
The FIR also said that the role of senior bank officials who were a part of the sanctioning committee that cleared loans amounting to Rs 1,575 crore might also be probed. These officials include K.V. Kamath (current president of New Development Bank, formerly BRICS Bank), current ICICI Bank MD Sandeep Bakhshi, K. Ramkumar, Sonjoy Chatterjee (CEO, Goldman Sachs India), N.S. Kannan, Zarin Daruwala (CEO, Standard Chartered India), Rajiv Sabharwal (CEO, Tata Capital) and Homi Khusrokhan.
The current CEO of ICICI Bank, Sandeep Bakshi, has also been named in the FIR, but he hasnt been accused.
On Thursday, CBI raided the the Nariman Point offices of Deepak Kochhars company NuPower Renewables Limited (NRL), the Videocon Group and Supreme Energy Pvt Ltd (SEPL). Videocons offices in Aurangabad were also searched.
But what happened?
Chanda Kochhar took charge of ICICI Bank as its CEO and MD on May 1, 2009.
According to the FIR, on August 8, 2009, ICICI Bank disbursed a Rs 300 crore loan to a Videocon group company, Videocon International Electronics Ltd (VIEL). Chanda Kochhar was a member of the panel which sanctioned that loan. A day after, Venugopal Dhoot transferred Rs 64 crore to NuPower Renewable managed by Deepak Kochhar.
ICICI Bank that approved a Rs 750 crore loan to Videocon Industries Ltd (VIL). Kochhar was a part of the sanctioning committee as well. In all, ICICI Bank sanctioned 6 high-value loans to various Videocon companies between June 2009 and October 2011 when Chanda Kochhar was MD and CEO of the bank, according to a CBI source.
Total loans of Rs 1,575 crore given by ICICI Bank to the Videocon group had turned non-performing assets (NPA). The current CEO of ICICI Bank was also a part of those sanctioning committees.
Furthermore, in 2012, ICICI Bank approved another loan worth Rs 3,250 crore to Videocon industries. This loan followed a transfer back of shares from Dhoot-owned Supreme Energy to Deepak Kochhar for a relatively low amount. This loan was a part of the Rs 40,000 crore loan that Videocon received from a consortium of 20 banks led by the State Bank of India.
The then anonymous whistleblower, Arvind Gupta, had flagged these details in a letter to the prime minister, the RBI, and other authorities in 2016. The Indian Express, in a fresh investigation, published these details on March 28, 2018.
What are Kochhars missteps?
As her husband was involved in commercial dealings with one of the banks possible beneficiaries, the ethical thing for Kochhar to do here was to recuse herself from the loan sanctioning committee.
Furthermore, the loans that were approved, according to the FIR, were used to help Videocon companies repay their existing loans to the parent. The FIR also said that these loans were allegedly used by Videocon to refinance their existing loans, a step that violated ICICIs credit policy.
Is Kochhar the only one to be blamed?
The short answer is no. There are numerous players here whose roles need to be investigated.
First and foremost amongst them is the board of ICICI Bank. The board exists to oversee the CEO. When Kochhar did not recuse herself, why didnt the board compel her to? That implies that the board either did not do their due diligence about Kochhars conflict of interest, or, perhaps more disturbingly, did their due diligence but chose to be blasé about their findings.
Furthermore, when allegations against Kochhar were made public, on March 28, 2018, the ICICI board immediately gave Kochhar a clean chit and said that there was no question of any quid pro quo/nepotism/conflict of interest. Did the board not investigate then? That clean chit, according to the board, was premised on the report of a 2016 inquiry by law firm Cyril Amarchand Mangaldas that found Kochhar innocent of all allegations of nepotism and conflicts of interest.
A fresh inquiry was announced on May 30, 2018, by ICICI Bank to look into the allegations. These came a month after its publicly stood by Kochhar. What was the reason for the delay?
Later, ICICI Bank instituted an external inquiry headed by retired Supreme Court judge B.N. Srikrishna to look into the allegations of nepotism and quid pro quo against Kochhar. Its report hasnt come out yet, but the FIR is expected to influence its findings.
After the Srikrishna inquiry was instituted in June 2018, Kochhar went on leave pending the report. In October 2018, she finally resigned.
Second, the loans amounting to Rs 3,250 crore that were approved and disbursed in 2012 by ICICI Bank were a a part of the Rs 40,000 crore loan that Videocon received from a consortium of 20 banks led by the State Bank of India. ICICIs stake was about eight per cent. Did the other banks not do their own due diligence? And why did ICICI boards fail to find out that Deepak Kochhar had been transferred shares from Dhoot-owned Supreme Energy?
It seems either incredibly naïve and irresponsible, or intentionally malicious that ICICIs board, with all the resources and information they have readily available, could not discern these incongruous patterns that a layperson, such as Arvind, Gupta, did out using publicly available documents. Also, why didnt the law firms investigations into the 2009 loans reveal these conflicts of interest?
Aditi Agrawal is a senior sub editor at Qrius