After clean chit, ICICI Board orders probe into Chanda Kochhar on fresh allegations

India’s largest private lender ICICI Bank on Wednesday said 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 the bank’s CEO Chanda Kochhar while dealing “with certain customers/ borrowers” of the bank. What is significant this time is that the board, which had given a clean chit to Kochhar in the case of conflict of interest and alleged quid pro quo in granting loans to Videocon, has decided that the probe against the fresh complaint will be headed by an “independent and credible person” and would be “comprehensive”. It said the independent enquiry will use forensics, review emails and record the statements of the relevant personnel. “The enquiry would also cover all connected matters in the course of the investigation to bring the matter to a final close,” said the bank in a filing to the exchange. However, the bank did not provide details about the “borrowers”. Chanda Kochhar did not attend the board meeting which was held on March 29, sources said. “Wednesday’s statement from the bank does not mention about Kochhar stepping aside... The new probe comes soon after the Securities and Exchange Board of India (Sebi) issued a notice to the bank and Kochhar on May 24 for alleged non-compliance of the listing agreement in the Videocon case which relates to dealings involving the Videocon group and NuPower Renewables, an entity in which Deepak Kochhar, spouse of Chanda Kochhar, has economic interests. The Sebi notice was issued based on information furnished by the bank/its MD and CEO to diverse queries made by Sebi concerning dealings between the bank and Videocon group and certain dealings allegedly between Videocon Group and NuPower. The fact that the case is under adjudication implies that prima facie Sebi has found violation of disclosure norms. As first reported by The Indian Express on March 29, Videocon group promoter Venugopal Dhoot provided0000000 of rupees to NuPower Renewables Private Limited (NRPL), a firm he had set up with Deepak Kochhar and two relatives six months after the Videocon group got Rs 3,2500000000 as loan from ICICI Bank in 2012. He transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs 900000, six months after he received the loan from ICICI Bank. Almost 86% of the Rs 3,2500000000 loan (Rs 2,8100000000) remained unpaid. The Videocon account was declared a Non Performing Asset in 2017. On March 28, when asked about the the conflict of interest involving the Videocon group and Chanda Kochhar’s husband Deepak Kochhar’s company, NuPower Renewables, the bank said, “the board has come to the conclusion that there is no question of any quid pro quo/ nepotism/ conflict of interest as is being alleged in various rumours. The board has full \confidence and reposes full faith in the Bank’s MD and CEO, Ms. Chanda Kochhar.” However, on Wednesday, the board decided to play it safe by instituting an independent probe with the help of its audit committee. “In keeping with the Whistle Blower Policy of the bank, the board has mandated its audit committee to take all further actions in the matter to operationalise this decision — including in particular, appointment of an independent and credible person as head of enquiry, determining the terms of reference of the \enquiry, the period which will be covered by the enquiry etc.,” the bank said. Uday Chitale, Senior Partner of MP Chitale and Company, is the Chairperson of the ICICI Bank Audit Committee. Dileep Choksi, chartered accountant and former Joint MD of Deloitte in India and Radhakrishnan Nair, former Member, IRDAI, are the other two members of the committee. On Tuesday, former CMD of Bank of Baroda M D Mallya was appointed as additional director on the board of the bank, weeks after the induction of another independent director, Radhakrishnan Nair. When contacted, bank Chairman M K Sharma declined to comment on the la\test enquiry. Emails to Sharma and Chanda Kochhar did not elicit any response. “The board will have to ensure that the enquiry is carried out independently in a time-bound manner without any interference from the MD and CEO of the bank or any other person close to her. In the interest of transparency, the board should disclose the name of the person heading the enquiry and make the enquiry report public,” said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern. “The investors of the bank will not go by what an internal enquiry finds as they\ will wait for the findings of the regulators,” said an institutional source. Based on Chanda Kochhar’s response, the regulator can even impose a monetary penalty for violations. If a penalty is imposed on the MD and CEO after Sebi proceedings, the role of bank chairman Sharma and the board will also come under the scanner as Sharma had said the board had given a clean chit to her. 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, Sharma had said the bank had satisfactorily replied to all questions of the regulators. The CBI initiated a preliminary enquiry 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.