The accomplished and well-known banker has been struck down with a number of malpractices, as CBI seems to have found sufficient evidence to implicate Kochhar in the near future.

HEAD SHOT

The ED claims to have established a money trail pointing towards reciprocity between Chanda Kochhar, husband Deepak Kochhar and Venugopal Dhoot, promoter of Videocon After a yearlong probe into misdealing, CBI filed a FIR against the three on 20th January 2019 is focusing on the trail of kickbacks allegedly paid by two companies and the possibility of their diversion abroad to a tax haven Misappropriations have surfaced regarding the Kochhar residence in South Mumbai and the sale of Radhika Apartments, suggesting a wider gamut of frauds initiated by Dhoot and the Kochhars.

Once the country’s most prolific banker, Chanda Kochhar is today the main link in a fraud that set India back financially by over Rs. 3000 Crores. The issue is defaulted loans to two companies Videocon (INR 1575 Crores) and Essar Steel Minnesota (USD 530 Million) that were sanctioned by then MD Kochhar between 2009 and 2011.

After a yearlong probe, CBI filed a FIR in January against Chanda Kochhar, her husband Deepak Kochhar, and Videocon Chairman Venugopal Dhoot citing dealings led to wrongful gain to borrowers and the accused.

Reports claim that CBI now has enough evidence to prove Kochhar’s link with Dhoot. Its next step is to ascertain the connection between ICICI loans and money transferred made by Videocon to Deepak Kochhar.

With the enquiry now moving into maturity, the ED has been quizzing the suspects, having interrogated Kochhar four times in four days in March. It has conducted raids at the establishments of Videocon group and nuPower. Kochhar’s problems are mounting, as a senior agency official said they are almost nearing the end of their investigation :

“From the interrogation and a few incriminating documents seized during the raids, we now have some workable leads which indicate that the monies received as kickbacks were diverted to a tax haven.”

A Shining Screw in India’s Banking Machine

One of the most powerful people in the Banking sector, Kochhar has been pivotal in shaping ICICI Bank into the organization it is today. Her achievements include successfully placing the bank as one of the largest retail financiers in India. Kochhar is a pioneer of the ATM revolution. Her work led to elevation to the post of MD and CEO in 2009.

Kochhar is an individual star having won numerous accolades including ‘Retail Banker of the Year’, ‘Business Woman of the Year’, “30 Most Powerful Woman Leaders”. In 2011, the Indian government recognized her contributions to the economy with the Padma Vibhushan award. She sits on esteemed boards such as Indian Banks Association, National Institute of Securities Markets, and the Prime Minister’s Council on Trade & Industry.

The Allegations and the Probe

The Video “CON” Affair

What’s majorly making the news is the Videocon connection. Deepak Kochhar’s NuPower Renewables (which he had acquired for cheap – Rs. 9 Lac) received a Rs. 64 Crore loan in 2010 via a maze of shell companies from Venugopal Dhoot. It also came to light that Dhoot had sold his 50 percent stake in NuPower Renewables to Deepak for a mere Rs 2.5 Lac. This was on the back of loans worth over Rs 1,575 crore from ICICI Bank between 2009 and 2011. The transfer from Dhoot to Kochhar’s husband is reported to have occurred a day after the final INR 300 Crore loan disbursed to Videocon Group by ICICI Bank. An unnamed CBI official has said:

“By now we have ascertained that the loans received by Deepak Kochhar’s NRL from Videocon and Firstland Holdings were kickbacks paid to the couple for helping their group companies avail loan from ICICI Bank when Chanda Kochhar was at the helm,”

Although Deepak Kochhar has accepted dealings with Dhoot, he denied having discussions with his wife in the entire scheme. He stated that the timing of loan transfers from Bank to Dhoot and Dhoot to his companies is purely coincidental. Chanda Kochhar has also denied being aware of the dealings between her husband and Dhoot, on multiple occasions.

CBI is investigating the case of kickbacks received by Kochhars via shell companies, for loans to Videocon from ICICI Bank when Chanda Kochhar was at the helm. Credits: Indian Express

More misdealing surfaced as the agency gathered information on the Kochhars’ assets. It is reported their south Mumbai residence at CCI Chambers was owned by Quality Appliances Pvt Ltd (now Quality Techno Advisors Pvt Ltd), a firm linked to Videocon, between 2009 and 2016 before being transferred to Deepak Kochhar at a nominal price. Kochhar denied these claims when talking to ET saying the flat was his since February 1996, sold to him by on Bilquis Begum Jahan as proven by conveyance deed and the certificate shared by him.

Another discrepancy emerged from the sale of Radhika Apartments, a 13-storey building which had earlier been the staff quarters of ICICI Bank in Prabhadevi, Mumbai. There are allegations of possible quid pro quo in sale to Dhoot’s firm at a much lower price than the market rate at the time.

The Essar ‘Steal’

Allegations have come up pertaining to impropriety with ICICI lending to companies associated with the Ruia family, the promoters of Essar Group. Essar Steel Minnesota LLC had raised $530 million from the bank in 2010 before it went the NPA (non-performing asset) route. The kickback here was INR 325 crore received by Deepak Kochhar’s NuPower in 2010 from Firstland Holdings, a Mauritius-based firm owned by Nishant Kanodia, who is the son-in-law of Ravi Ruia, the co-founder and Chairman of Essar Group.

Involvement of a third Kochhar

Name of a third Kochhar came to light with Avista Advisory, a company run by Chanda’s brother-in-law, Rajiv Kochhar. ICICI Bank borrowers, including Jaiprakash Associates and Jaiprakash Power, Videocon, GTL Infrastructure and Suzlon had hired Avista or restructuring of debt. ICICI Bank was a lender to all these entities. The bank denied engagement with Avista for any services, mentioning that it did not fall within the scope of the Companies Act, therefore, didn’t require Kochhar to disclose information.

From Titan to Traitor

It all went downhill for Kochhar starting 2016 when, an activist and investor Arvind Gupta alleged foul play. Kochhar initially received strong backing from the bank’s board. But repeated whistleblower complaints forced the bank to initiate probe on irregularities in 31 NPA loan accounts where the bank was alleged to have inflated profits by at least $1.3 billion over eight years by delaying provisioning for non-performing asset accounts.

This led the bank to conduct an internal inquiry headed by retired SC Judge Justice B N Srikrishna. The enquiry found Kochhar in violation of the bank’s code of conduct and acting in ‘conflict of interest’. The findings of the report said:

“…her lack of diligence with respect to annual disclosures as required by the Bank in terms of its internal policies, the ICICI Bank Code of Conduct and applicable Indian laws, rules and regulations on her interests (direct or indirect) towards avoidance of conflict of interest,”

The bank clarified there was no implication of the report on its financial statements or accounts. Initially, before the inquiry, Kochhar had proceeded on leave and then had resigned from the bank in October 2018.

Chanda Kochhar in her preliminary statement maintained that the decision to grant loans to both the firms was taken by the loan sanction committee, but was unable to explain her case when confronted with documentary evidence by the interrogators.

After the Srikrishna report, the Bank’s Board decided to treat the ‘separation of Chanda Kochhar from the bank’ as a ‘Termination for Cause’ under the bank’s internal policies. This meant revocation of all existing and future entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested and unexercised stock options, and medical benefits and all bonuses paid to Kochhar from April 2009 until March 2018.

In response to the enquiry, Kochhar stated that she was “ utterly disappointed, hurt and shocked by the decision ” of the board. Her statement said:

“I have not been given a copy of the report. I reiterate that none of the credit decisions at the bank are unilateral. ICICI is an institution with established robust processes and systems which involve committee based collective decision-making with several professionals of high caliber participating. Hence the organization design and structure obviate the possibility of conflict of interest.”

It is a humiliating development for someone who was once a national icon and epitome of women empowerment in the country. Other names apart from Kochhar from the ICICI top brass and other big banks have emerged in CBI’s probe.

“The CBI has mentioned some heavy names in its F.I.R. The loans were sanctioned by a committee of seasoned bankers and not Kochhar alone. There’s more to it than meets the eye.” – Deepak Kaistha

The Plot Deepens

As per the CBI FIR, some heavy names have been mentioned who were part of the various credit committees of ICICI Bank, that sanctioned loans to the Videocon group in violation of the bank’s credit policy.

These include some prominent bankers with old ties with ICICI such as New Development Bank K V Kamath, Goldman Sachs India chairman Sonjoy Chatterjee, Standard Chartered Bank CEO Zarin Daruwala, Tata Capital head Rajiv Sabharwal and Tata Capital senior advisor Homi Khusrokhan.

The list includes current ICICI Bank CEO Sandeep Bakshi was brought in by the bank in 2008 when it was struggling with rising delinquencies. He was the COO before taking up Kochhar’s role after her departure from the bank. The banking stalwarts mentioned by CBI in its FIR will be called for inquiry by the CBI as the investigation continues.

The CBI widened its probe to reach out to the current and former brass of the ICICI Bank who were on the loan sanctioning committee. Credits: Business Standard

This presents a more serious issue where apart from the allegations on Kochhar. It is perhaps a failure by board members and the bank to keep a check on a senior executive’s misuse of power. India’s Finance Minister Arun Jaitley who advised the agency against adventurism, telling it to focus on the main suspect at hand.

Further probe will find out if there are more names that have colluded with Kochhar is the quid pro quo case.

PARTING SHOT

As per ED, Chanda Kochhar was the sole beneficiary and no other employee of ICICI Bank benefitted from the loans granted. After the investigation, the Board of ICICI Bank decided to treat Kochhar’s resignation as “termination for cause” , prompting Kochhar to make a statement. The CBI probe revealed Chanda and the former ICICI Bank directors, including current CEO Sandeep Bakhshi, were a part of the panel that sanctioned loans for the defaulters. The allegations aroung Firstland Holdings and Ruia family was not investigated as per the statement by the bank.

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