An independent inquiry initiated by ICICI Bank has indicted former CEO Chanda Kochhar of violation of the banks code of conduct and internal policies. Quoting an inquiry report on allegations of loan irregularities against Kochhar, the bank on Wednesday said it would treat her resignation as “termination for cause”.
The report, submitted by Justice (Retd) B.N. Srikrishna, concluded that there was lack of diligence with respect to annual disclosures and violation of of conduct on Kochhar’s part.
This follows on the heels of a CBI charge sheet brought against the oncecelebrated banker last week, and after the bank’s preliminary investigation into the allegations resulted in a clean chit for Kochhar in March 2018.
Read more: Explained: CBI’s FIR against Chanda Kochhar, et al.
An external inquiry headed by retired Supreme Court judge B.N. Srikrishna was instituted by the bank to look into the allegations in May 2018, a month after its board publicly stood by Kochhar.
What this means
The termination, based on the findings of this latest report, summarily cancels all of Kochhar’s increments, bonuses, medical benefits stock options, ICICI bank said in its statement. Furthermore, Kochhar will have to return bonuses paid from April 2009, when she took over as CEO, until March 2018, when the Indian Express first published the discrepancies.
According to ICICI, the inquiry report concluded that Kochhar was “in violation of the ICICI bank code of conduct, its framework for dealing with conflict of interest and fiduciary duties and in terms of applicable Indian laws, rules regulations”. The report also noted her “lack of diligence” with respect to the bank’s internal policies, code of conduct and in avoiding conflict of interest. “The bank’s processes were rendered ineffective by her approach,” the inquiry said.
Kochhar, 56, went on an extended leave from June 2018 before finally quitting as CEO and managing director of the bank in October, over allegations that she the Videocon Group, a consumer electronics and oil and gas exploration company, by refinancing their loans despite a conflict of interest.
The disputed loans: a timeline
According to the FIR following a CBI probe into ICICI Bank’s dealings, the bank had disbursed a Rs 300 crore loan to a Videocon group company, Videocon International Electronics Ltd (VIEL) in August 2009.
Kochhar was a member of the panel which sanctioned that loan.
Within a day of the loan approval, Videocon Group MD Venugopal Dhoot transferred Rs 64 crore to NuPower Renewable, managed by her husband Deepak Kochhar.
The next loan was of Rs 750 crore, made out to Videocon Industries Ltd (VIL), again with Kochhar as part of the sanctioning committee.
Six such high-value loans amounting to Rs 1,575 crore were sanctioned by the Kochhar-led bank, to various Videocon companies between June 2009 and October 2011, according to a CBI source. They had all turned non-performing assets (NPA).
In 2012, another loan worth Rs 3,250 crore was made out to Videocon industries following 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.
Whistleblower Arvind Gupta‘s letter to the RBI and the Prime Minister first opened the can of worms in 2016, after which the Indian Express, in a fresh investigation, published these details in March 2018.
CBI investigation
The CBI is allegations of quid pro quo in the loans granted to Videocon by ICICI Bank, given that her husband Deepak had business ties with Videocon’s Venugopal Dhoot. The CBI has registered cases against both men, besides raiding their respective offices.
On January 24, the investigative agency booked Kochhar, charging her criminal conspiracy, cheating and abuse of official position for dishonestly sanctioning loans to the Videocon group.
The fresh FIR accuses the beleaguered banker of receiving 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.
Who else is to blame?
The board of ICICI Bank is to share the blame for not keeping a check on Kochhar’s sanctioning powers or compelling her to recuse herself from the committee.
Furthermore, when the allegations first surfaced in March 2018, the ICICI board gave Kochhar a clean chit ruling out any “question of any quid pro quo/nepotism/conflict of interest. This was presumably based on the report of a 2016 inquiry by law firm Cyril Amarchand Mangaldas that miraculously failed to reveal the conflicts of interest.
The FIR also named officials who were part of ICICI Bank’s sanctioning committee that cleared loans amounting to Rs 1,575 crore, including
current MD Sandeep Bakhshi. These officials include K.V. Kamath (current president of New Development Bank, formerly BRICS Bank), 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.
Prarthana Mitra is a staff writer at Qrius