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Complaint by ICICI insider forced board to probe Chanda Kochhar

On May 30, the bank stated in a regulatory filing that its board has decided to institute an “enquiry” into a new complaint received from an anonymous whistleblower, alleging non-adherence of code of conduct, conflict of interest and quid pro quo by Kochhar while dealing “with certain borrowers”.

Written by Khushboo Narayan , George Mathew | Mumbai |
Updated: June 2, 2018 7:01:19 am
icici bank, chanda kochhar, icici bank fraud, icici videocon case, icici fraud whistleblower, icici ceo, indian express MD and CEO of ICICI Bank Chanda Kochhar. The bank says she’s on annual leave, nothing to do with inquiry.

The latest anonymous complaint against the MD and CEO of ICICI Bank, Chanda Kochhar, which forced the organisation’s board to institute an enquiry to probe the allegations of a possible quid pro quo, is likely to have come from within the bank.

The whistleblower’s complaint is the third against the ICICI Bank CEO. Arvind Gupta, an investor, had previously lodged two complaints — on an alleged conflict of interest and code-of-conduct violation by Kochhar while sanctioning loans to the Videocon group in 2016 and on dealings with the Essar group in 2018.

On May 30, the bank stated in a regulatory filing that its board has decided to institute an “enquiry” into a new complaint received from an anonymous whistleblower, alleging non-adherence of code of conduct, conflict of interest and quid pro quo by Kochhar while dealing “with certain borrowers” of the bank.

It indicated that the “independent enquiry” would “also cover all connected matters in the course of the investigation to bring the matter to a final close”. “In other words, the bank is indicating that the enquiry panel is likely to look into all the complaints against the bank’s CEO,” banking sources said.

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Also read | ICICI Bank denies asking CEO Chanda Kochhar to go on leave pending probe

According to the ICICI Bank website, its whistleblower policy covers only employees and directors of the bank, which makes it clear that an insider has filed the latest complaint against the CEO. “ICICI Bank is committed to adopting the highest business, governance, ethical and legal standards. An important policy in this context is the Whistle Blower Policy that the Bank formulated as early as 2003. The Whistle Blower Policy covers all employees, including directors of the bank,” the bank states.

When contacted by The Indian Express, an ICICI Bank spokesperson did not comment on the latest complaint.

According to the bank’s whistleblower policy, it provides “a secure mechanism for employees to raise concerns (with an option to remain anonymous), which are appropriately and independently investigated, addressed and reported to the Audit Committee of the board”.

Uday Chitale, Senior Partner of MP Chitale & Company, is the chairperson of the ICICI Bank Audit Committee. The bank is yet to constitute the enquiry panel.

Also readChanda Kochhar was on panel that cleared Videocon loan: ICICI Bank chairman MK Sharma

On Friday, the bank said it has not asked Kochhar to go on leave till it conducts the enquiry. It said Kochhar was on her annual leave, which was planned in advance, and that it has not appointed a search committee to find Kochhar’s successor.

Arvind Gupta, an investor who had complained in March 2016 about the alleged business links of Chanda Kochhar’s husband Deepak Kochhar and Videocon Group promoter Venugopal Dhoot to the Prime Minister’s Office sent a supplementary letter on May 11. It asked the government to probe transactions between the Essar Group and Nupower Renewables Pvt Ltd owned by Deepak Kochhar.

In this letter, Gupta claimed that Essar Global, Mauritius, directly funded Nupower Group through Nishant Kanodia, son-in-law of Ravi Ruia, and Anirudh Bhuwalka, nephew of Shashi Ruia, using Mauritius-based Firstland Holdings and A-One Motors and Services Ltd owned by Kanodia and Bhuwalka, respectively.

On April 26, The Indian Express had first reported that NuPower got investments of Rs 325 crore from Firstland Holdings. The investments from Kanodia’s firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was lead banker in a consortium of Indian banks that extended a $530-million loan to Essar Steel Minnesota LLC on December 29, 2010. This loan was later classified as an NPA.

Kanodia has maintained that this investment was sold in 2013 to a private equity fund and that Firstland has recovered its full investment. He also said that none of his firms have any loans from ICICI Bank. Essar, too, said it had not made any investments in Firstland or NuPower.

However, Essar Capital Holdings Limited did invest Rs 163.54 crore in Matix Chemicals and Fertilisers, a subsidiary of Firstland Holding. This came in tranches: Rs 96.76 crore in December 2010 and Rs 66.78 crore in August 2011. Essar has contended that these transactions were on “arm’s length” basis, and have no connection with NuPower.

Gupta’s supplementary letter has also alleged that Nupower Technologies Ltd, a loss-making subsidiary of Nupower Renewables, was acquired at a premium by Bhuwalka for Rs 197 crore.

“The overt and covert patterns of funds flow into the Kochhar’s Nupower Group from Essar Group is quite similar to that of Videocon Group,” claimed Gupta in his second letter.

When contacted by The Indian Express, Gupta denied that he was behind the third complaint that led to the bank launching an enquiry.

“I don’t believe in filing anonymous complaints. I’m not the whistleblower. I’m not an employee but an investor of the company and my complaint has my name and address,” he said.

As first reported by The Indian Express on March 29, Videocon group promoter Venugopal Dhoot provided crores of rupees to NuPower Renewables Pvt Ltd (NRPL), a firm he had set up with Deepak Kochhar and two relatives six months after the Videocon group got Rs 3,250 crore as loan from ICICI Bank in 2012.

He transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs 9 lakh, six months after he received the loan from ICICI Bank. Almost 86 per cent of the Rs 3,250 crore loan (Rs 2,810 crore) remained unpaid. The Videocon account was declared an NPA or a bad loan in 2017.

The bank admitted that Chanda Kochhar did not recuse herself from a credit committee meeting which decided to grant the loan to the Videocon group in 2012. In April, M K Sharma, the bank’s chairman, had said the bank had satisfactorily replied to all the questions of the regulators.

The CBI initiated a preliminary enquiry into the matter to check any wrongdoing, while other agencies, including the Enforcement Directorate, also opened investigations. The bank’s board stood firmly behind Chanda Kochhar, saying no wrong was committed by the MD and CEO. It said the loan was underwritten in accordance with the bank’s credit standards and was extended as part of a consortium involving over 20 banks.

Last month, M K Sharma, the bank’s chairman, had said the bank had satisfactorily replied to all the questions of the regulators. According to a recent review by the bank’s board, ICICI Bank exposure to Videocon at the time was at Rs 3,250 crore, less than 10 per cent of the total amount lent by the consortium.

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