By Prashansa Srivastava
Chanda Kochhar, her husband Deepak Kochhar, and Videocon Group Chairman Venugopal Dhoot, are currently caught up in a controversy over ICICI Bank allegedly granting loans worth Rs 32.5 billion to Videocon. Rs 28.1 billion of this loan amount remains unpaid and was declared as non-performing assets (NPAs) in 2017. This has led to questions about propriety, quid pro quo, nepotism, corporate governance lapse, and ethical business practices.
Below is a timeline of key transactions, which detail allegations of conflict of interest, as well as the ongoing CBI probe into the matter.
How it all started – 2008 to 2013
In December 2008, ICICI Bank MD Chanda Kochhar’s husband Deepak Kochhar and the Videocon group promoter Venugopal Dhoot, floated a clean energy firm called NuPower Renewables Pvt Ltd (NRPL). Dhoot held 50% stake in the company, along with his family members and associates. Deepak Kochhar and Pacific Capital, jointly owned by Deepak Kochhar’s father, and Chanda Kochhar’s brother’s wife, held the remaining 50%.
In January 2009, Dhoot resigned as director of NuPower and sold his 24,999 shares in the company to Kochhar for Rs 2.5 lakh.
NuPower received a loan of Rs 640 million from Supreme Energy Private Limited in March 2010. Dhoot owned 99.9% of this company. The loan was provided in the form of a fully convertible debenture—a type of debt security in which the whole value of the debenture is convertible into equity shares at the issuer’s notice.
By April 2010, Supreme Energy became a 94.99% shareholder in NuPower via a series of share transfers from Dhoot to Kochhar, and then from Kochhar to Pacific Capital, which in turn followed transfers to Supreme Energy. Kochhar the held the remaining 4.99% stake in NuPower. In November 2010, Dhoot transferred his 99.9 % shares in Supreme Energy to his associate Mahesh Chandra Punglia.
Between September 29, 2012, and April 29, 2013, Punglia transferred his shareholding to Pinnacle Energy Trust, which was being managed by Deepak Kochhar. The value of Punglia’s share transfer to the trust was Rs 900,000. In effect, Supreme Energy loaned Rs 64 crore to NuPower, and then wassubsumed by Pinnacle Energy within three years. Six months before the transfer of these shares took place, Videocon received a loan of Rs 32.5 billion from ICICI Bank.
The tale of suspicious transactions continues – 2016 to 2018
Arvind Gupta, an investor in Videocon group, found a series of questionable transactions in 2016. All of his information was gathered from public documents and filings with the Registrar of Companies. He published his findings in a blogpost in 2016. Seeking an inquiry into the dealings, Gupta wrote to Prime Minister Narendra Modi, the governor of the Reserve Bank of India, and other authorities. However, his complaints received little to no attention.
Almost 84%of the loan granted to Videocon, which amounted toRs 28.1 billion went unpaid and the Videocon account was declared as NPA in 2017 by ICICI bank. On March 29 this year, the Indian Express published a report raising questions about the dealings between ICICI Bank Ltd. and the Videocon Group. Two days later,
ICICI Bank backed Chanda Kochhar, saying it had full faith and confidence in her, and describing reports against her over the credit disbursement to Videocon Group as “malicious and unfounded rumours”. The bank claimed that in 2012, its credit committee did its due diligence before sanctioning its share of facilities in the syndicated arrangement to the Videocon group. However, recent reports suggest that the bank’s board is divided about Chanda Kochhar’s future in the organisation.
The bank also said that the committee was chaired by the then-ICICI Bank chairman and, that it included independent and working directors of the bank. They also said that ICICI bank saw no conflict of interest as Videocon was not an investor in NuPower, and the committee had many independent directors. Moreover, the loan was given as a part of a consortium with same terms and conditions, with full disclosures made under the Companies and Banking Regulation Act.
On March 31, the Central Bureau of Investigation (CBI) registered a preliminary inquiry against Deepak Kochhar and Videocon group chairman Venugopal Dhoot. This was followed by the income tax department issuing an I-T notice to Deepak Kochhar On April 3, the asking him to furnish details of his personal finances and income tax returns for the last few years, and business transactions with the firm NuPower Renewables. The department launched a full probe into the finances of the company and people associated with it.
A day after this, on April 4, the CBI, in an intense probe, questioned Rajiv Kochhar, the founder of financial services firm Avista Advisory Group, and Chanda Kochhar’s brother-in-law.
The Securities and Exchange Board of India (SEBI), the securities market regulator and watchdog, also began looking into the matter, for any possible disclosure and corporate governance-related lapses.
Meanwhile, the CBI continued to question Rajiv Kochhar for 3 consecutive days. If the agency in its initial probe, finds prima facie evidence a case may be registered against the accused.
However, many questions about the entire case remain answered. What was the nature of transactions between Kochhar’s renewable energy company and the Videocon group? How can the questionable transferring of shareholding between Dhoot, his associate and Kochhar be explained? How was the valuation of the final stake transfer at Rs 9 lakh achieved? Moreover, can Chanda Kochhar who has been associated with ICICI since 1984, see through her biggest and most personal crisis yet?
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