Chanda Kochhar sacked: All you need to know about Videocon-ICICI Bank loan controversy

ICICI Bank yesterday announced the appointment of Sandeep Bakhshi as chief operating officer and said CEO Chanda Kochhar would be on leave till completion of the internal inquiry against her in the Videocon loan matter.

Bakhshi, who is currently MD and CEO of ICICI Prudential Life Insurance, would take over as the bank’s COO on June 19, subject to various approvals.

In line with the highest levels of governance and corporate standards, Kochhar has decided to go on leave till the completion of the enquiry as announced on May 30, 2018, the bank said. But, what exactly is the Videocon-ICICI Bank loan controversy all about?

Soon later the bank sacked Kochhar, former ICICI Bank chief issued a statement saying she is ‘disappointed, hurt and shocked’ by ICICI Bank decision Wednesday evening to treat her resignation as a ‘termination for cause’. 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’.

On the same day, Chanda Kochhar, who resigned as CEO and MD of ICICI Bank, was sacked and all her entitlements were revoked by the bank.

On January 30, the report by an independent enquiry panel indicted that former ICICI Bank CEO Chanda Kochhar for violating regulations, with the bank deciding to stop all her unpaid retirement benefits and recover bonuses paid since 2009.

On January 24, the CBI registered an FIR in Kochhar and her husband Deepak Kochhar. The CBI also conducted raids in four locations in Mumbai in connection with the case. Hours after the raid, the CBI lodged an FIR against former ICICI Bank chief Chanda Kochhar, her husband Deepak Kochhar and industrialist VN Dhoot besides four companies.

What’s the issue?

Kochhar and her family members facing allegations of quid pro quo and conflict of interest with respect to a loan extended to certain entities, including the Videocon group. Multiple agencies, including the CBI and regulator Sebi, are already probing the alleged lapses involving Kochhar and her family members. “Kochhar has decided to go on leave till completion of the enquiry as announced on May 30. The board has noted and accepted this. During her period of leave, the COO will report to the board,” the statement said. The current tenure of Kochhar, who has been at the helm since 2009 and has been on “annual leave” for some time now, ends next March.

Is there a conflict of interest?

An Indian Express report claims, the question of conflict of interest comes as the transfer of the company to Deepak Kochhar happened six months after the Videocon got the lead of Rs 3,250 crore from ICICI bank with 86% of that loan is still unpaid and in 2017, the Videocon account was declared a non-performing asset.

Complicated Controversy

Kochhar, a career ICICI Group employee has been under the cloud since late March, when allegations of conflicts of interest and possible quid pro quo in lending to Videocon group, along with lack of disclosures by the bank, made headlines.

Following reports of allegations based on an activist’s complaint, the bank board earlier had come out strongly in support of her. Complicating the matters for her, the bank received another complaint against Kochhar by an internal whistle-blower, who made allegations of not following the bank’s code of conduct, late May.

This led the board to announce a detailed probe by an external expert into the allegations. Retired Supreme Court judge B N Srikrishna would be heading the probe panel. According to sources, he has accepted the request from the bank and the terms of reference for the panel are to be decided by the audit and governance committee of the bank.

While the contents of the whistle-blower’s complaint are not known, the first set of allegations against Kochhar pertains to alleged impropriety while lending to the cash-strapped Videocon Group and companies associated with the Ruia family, the promoters of beleaguered Essar Group. However, the statement from the bank did not have any mention of it.

The cases under scanner include the bank extending Rs 3,250 crore to Videocon Group in 2012 and the involvement of Chanda Kochhar’s family members, including her husband Deepak Kochhar, in first sanctioning the loan and then restructuring the same through Avista Advisory, a company run by his younger brother Rajiv Kochhar.

There are also allegations that NuPower — a company floated by Videocon group and Deepak — got investments of Rs 325 crore from the Mauritius-based Firstland Holdings, a firm owned by Nishant Kanodia, the son-in-law of Essar Group co-founder Ravi Ruia.

Kochhar impact on ICICI

Kochhar is credited for consolidating the operations of the bank after the departure of K V Kamath. The bank, with roots in development finance, has also seen a massive rise in its sour assets, courtesy mainly on exposure to the infrastructure sector, along with its peers, which led to a massive drop in profit in recent quarters.

Selling off stakes in group companies — it listed the life general insurance arms as well as brokerage businesses in quick succession — gave it the wherewithal to withstand the high provisioning required recently.

(With PTI inputs)

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