ICICI Bank Wednesday said an independent enquiry found former CEO Chanda Kochhar had violated the bank’s Code of Conduct in the Videocon fraud case. The enquiry report submitted by Justice (Retd) B N Srikrishna Wednesday concluded that there was lack of diligence with respect to annual disclosures and violation of code of conduct, on her part.
Based on the report, the board of the bank has decided to treat her resignation as ‘Termination for Cause’ under the bank’s internal policies.
Chanda Kochhar,the first woman CEO of a bank in the country, said she is “disappointed, hurt and shocked” by ICICI Bank decision. Kochhar said she served the ICICI group for 34 long years “with all my dedication and hard work” and the bank’s latest decision has caused her “immense hurt and pain”.
“I am utterly disappointed, hurt and shocked by the decision,” Kochhar, who was on leave from June and finally resigned early October, said in a statement this evening. She was quick to add that none of the credit decisions at the bank are unilateral and the bank has established processes and systems which involve a committee-based collective decision-making. “The organisational design and the structure obviate the possibility of conflict of interest,” she claimed.
The statement from the bank said, “The Enquiry Report, with the scope period of April 1, 2009 to March 31, 2018 (unless specific information required enquiry into transactions or facts of an earlier period), concluded, primarily on account of ineffectively dealing with conflict of interest and due disclosure or recusal requirements, that Ms Chanda 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 and regulations.”
In March 2018, The Indian Express had reported about a series of financial transactions and ownership transfers that took place between 2008 and 2013 across companies owned by Venugopal Dhoot, and those owned by Deepak Kochhar — which, in turn, raised questions of propriety and conflict of interest for Chanda Kochhar who was then MD and CEO of ICICI Bank.
The CBI has filed an FIR against the Kochhars, Dhoot and firms including Nupower Renewables and Videocon Industries for allegedly cheating ICICI Bank of Rs 1,730 crore until March 2012.
Here’s the full text of the ICICI Bank statement:
Pursuant to the decision of the Board of Directors of ICICI Bank on May 29, 2018, the Audit Committee of the Bank had on June 6, 2018 appointed former Supreme Court judge, Hon’ble Mr. Justice (Retd.) B. N. Srikrishna as the Head of Enquiry (HOE) to undertake a comprehensive enquiry on allegations against Ms. Chanda Kochhar.
The HOE was assisted by a law firm, and a forensic and investigative services firm for the conduct of the enquiry.
The Bank has received the Enquiry Report from HOE, and the Board of Directors considered the same at the Board Meeting held on January 30, 2019.
The Enquiry Report, with the scope period of April 1, 2009 to March 31, 2018 (unless specific information required enquiry into transactions or facts of an earlier period), concluded, primarily on account of ineffectively dealing with conflict of interest and due disclosure or recusal requirements, that Ms Chanda 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 and regulations.
The Enquiry Report also concluded that 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, when considered that
the Bank’s processes were dependent solely on the directors discharging their fiduciary duty to recuse themselves and avoid conflict, implies that the Bank’s processes were rendered ineffective by her approach to such disclosures and avoidance of conflict.
The Bank notes that there are no implications of the Enquiry Report on its published financial statements (Indian or US GAAP) for the relevant periods.
Following the receipt of the Enquiry Report, and due consideration of the Enquiry Report and the conclusions thereat, after due deliberations, the Board of Directors decided to treat the separation of Ms Chanda Kochhar from the Bank as a ‘Termination for Cause’ under the Bank’s internal policies, schemes and the Code of Conduct, with all attendant consequences (including revocation of all her existing and future entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested & unexercised stock options, and medical benefits), and require the clawback of all bonuses paid from April 2009 until March 2018, and to take such further actions as may be warranted in the matter.