VIDEOCON GROUP’S QUID PRO QUO AND CHANDA KOCHHAR

Chanda Kochhar was ICICI Bank’s deposed former managing director and CEO. She was on the bank’s credit committee that sanctioned a loan of Rs 3,250 Crore to the Videocon Group in 2012. She has been indicted of sanctioning high-value finances to the Videocon Group when she was the CEO of the bank. She had by taking such actions violated the bank’s internal policies and failed to disclose the conflict of interest. It is speculated that she intentionally desecrated the institution’s lending policies in exchange for an investment by the Dhoots (Videocon Group) in a venture spearheaded by her husband. Videocon’s promoter Venugopal Dhoot was one of the first investors in NuPower Renewables promoted by Deepak Kochhar (Chanda Kochhar’s husband) in 2008.
The ICICI Bank’s code of conduct states as following: “In order to avoid conflict of interest, executive officers and directors must disclose to the group compliance officer any material transaction or relationship that reasonably could be expected to give rise to such a conflict, and the group compliance officer shall notify the board governance and remuneration committee of any such disclosure.” Kochhar for the first time wrote to bank’s board about her husband’s business dealings with Videocon in April 2018.
ICICI Bank’s Board of Directors took a decision on May 29, 2018, pursuant to which the Audit Committee appointed the retired Supreme Court justice BN Srikrishna the Head of Enquiry on June 6, 2018 to undertake a comprehensive enquiry on the allegations against Chanda Kochhar. The report was received and considered by the Board of Directors on January 30, 2019. The Enquiry Report primarily concluded on account of ineffectively dealing with conflict of interest and due disclosure or recusal requirements, that 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.
As per the findings of the report the Kochhar’s current residence at CCI Chambers, opposite the Cricket Club of India in South Mumbai have been bought from the Videocon Group in a complex transaction in the mid-1990s. The apartment is said to be purchased through Credential Finance, a financial services firm established by Deepak Kochhar (ChandaKochhar’s husband) and his brother, Rajiv Kochhar. The Videocon Group was said to have a stake in Credential Finance. However both the parties, Deepak Kochhar and Videocon Group Venugopal Dhoot deny this finding of the report.
After the report was submitted and 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 claw-back of all bonuses paid from April 2009 (when she became the CEO) until March 2018, and to take such further actions as may be warranted in the matter.
In the month of January, the Central Bureau of Investigation filed a case of criminal conspiracy and cheating against Chanda Kochhar, Deepak Kochhar and Venugopal Dhoot.
“The Srikrishna enquiry report is a privileged and confidential document of an independent committee which was appointed at the direction of the board of directors of ICICI Bank for its purposes and actions.The bank has already made the material conclusions of the report and the action taken by the board in this matter public vide a news release on Jan 30, 2019, which was also filed with the stock exchanges. We have nothing further to add on this as of now.” said an ICICI Bank spokesperson.
However the impact of these reports and CBI probe remains unknown. But the question that remains unanswered is was she alone responsible and involved? Could the actions taken by Chanda Kochhar were independent in nature or was the Board playing a larger role than known because the bank board had issued a statement in March 2018 in support of Kochhar and that there was no question of any quid pro quo or nepotism/conflict of interest. The board had full confidence and had faith in Kochhar and commended the management team under her leadership.In May, the bank appointed Justice Srikrishna to conduct an independent enquiry after an anonymous whistle-blower complaint.In October 2018, ICICI Bank issued another statement that the board had based the March clean chit on a law firm’s enquiry report in 2016 when the allegations had first surfaced. It added the law firm had withdrawn the report, finding no evidence of nepotism and conflict of interest.
The case also raises the questions of Corporate Governance. Chanda Kochhar can defend herself and challenge the decision in a court of law. Also it must be pointed out that before a person is found guilty or innocent, it is the fundamental requirement of fairness that due process must be followed. The bank has not shared the panel report with her. To end it, it is suffice to say that Chanda Kochhar is a celebrated banker and to be indicted reflects negatively on the bank also on the RBI who has kept a blind eye on the matter and on the Government. Let future say what would happen next. Will Chanda Kochhar take legal route?

By –
Bhanu Priya Bhati
Sudent Reporter- INBA