In a shocking move on January 31, 2019, ICICI Bank, the second largest bank in the country has sacked MD and CEO Chanda Kochhar with retrospective effect. It has also asked her to repay over Rs. 10 crore in bonuses since April, 2019 and has stated revoking of her stocks, which amount to Rs. 346 crore as per the market value.

This move comes after a report which found Chanda Kochhar guilty of violating bank’s rules and norms and for disbursing loans to the Videocon group.

Read this article know all about Chanda Kochhar, her background, history and the ICICI Bank CEO scandal.

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Chanda Kochhar: Decoding her Exit from the ICICI Bank

Chanda Kochhar

Chanda Kochhar, born November 17, 1961, aged 58, was the Managing Director (MD) and Chief Executive Officer (CEO) of ICICI Bank, which is India’s largest private bank and second largest bank in the country. She was also heading the Corporate Centre of ICICI Bank.

How it all started

The controversy began when Chanda Kochhar disbursed a hefty loan to the Videocon group, who in turn invested a large sum of money into NuPower Renewables, a company owned by Chanda Kochhar’s husband Deepak Kochhar. Venugopal Dhoot, MD, Videocon group had allegedly invested crores of money in NuPower after it received a loan of around Rs. 3,250 crore from the ICICI Bank in the year 2012.

Whistleblower Arvind Gupta bringing the issue brought to light

The Videocon issues was first noticed and brought into light by whistleblower Arvind Gupta who wrote about the same on his blog. He alleged that a company owned by Dhoot had loaned Rs. 64 crore to  NuPower Renewables in March 2010, and both Deepak Kochhar and Venugopal Dhoot were seen promoting it. Later the lending company was acquired by Deepak Kochhar was a platry sum of 9 lakh, and this raised eyebrows, as a company which had earlier loaned out Rs. 64 crore to Dhoot was acquired by him by a measly amount of Rs. 9 lakhs. Also, Dhoot was accused by Gupta for selling his 505 stake in NuPower Renewables for Rs. 2.5 lakhs to Deepak Kochhar. Gupta alleged that ICICI Bank became an NPA in 2017 after awarding the loan to Videocon was solely due to Dhoot’s business relations with the couple Deepak and Chanda Kochhar respectively. Reportedly, nearly 86% of Videocon’s ICICI Bank loans remains unpaid.

The Brother-in-law, Deepak Kochhar’s involvement

Also, apparently, ICICI Bank borrowers named Jaiprakash Associates and Jaiprakash Power had hired services of a firm called Avista Advisory Group, which was run by Chanda Kochhar’s brother in law Rajiv Kochhar. Videocon, GTL Infrastructure, Suzlon were all clients of both ICICI and the Avista Group.

Kochhar’s property issues

The is also a property angle to the Chanda Kochhar controversy. Kochhar’s acquisition of the current family residence in South Mumbai was probed by the  Income Tax Department and Deepak Kochhar was again found to be involved in complex transactions with forms related to Videocon. The house was bought through Deepak’s financial firm Credential Finance Ltd, which had relations with Videocon group, the report said.

Sale of the ICICI Building

The 13-storey ICICI Building in Prabhadevi in Central Mumbai was also allegedly sold off to Videocon industries and to Dhoot at a much lower price than the then existing market value. The Indian Express had also reported a 2010 probe by the Income Tax department on a real estate transaction between ICICI and Videocon as part of its investigation suspecting tax evasion in the ICICI Bank-Videocon loan case.

The Mauritius Connection

The whistle-blower Gupta also alleged ’round-tripped investments’ of Rs. 453 crore by NuPower from Essar Group through an organisation called Matix Group, along with its holding entity Firstland Holdings Ltd, all three of which are based out of Mauritius. The said firms are owned by the son-in-law of Essar Group Vice-chairman Ravi Ruia. ICICI once played lender to its now bankrupt US steel project in Minnesota and its UK refinery project at Stanlow. Essar Group, has, however, dismissed allegations saying it has no business interests vested in Firstland Holdings Ltd.

Irregularities in Kochhar’s 31 Loan Accounts

A whistleblower’s complaint accuses irregularities in 31 loan accounts. It was alleged that ICICI Bank inflated profits by at least $1.3 billion over eight years by delaying provisions over eight years by delaying provisioning for 31 non-performing assets (NPA) accounts. The complaint cites that he bank delayed provisioning for NPAs from loans worth at least $3 billion. The whistleblower claimed the bank would have reported losses in some quarters over the 8 years had the bank’s management not deferred impairment of loans.

Chanda Kochhar’s Resignation

After the CBI Probe on Chanda Kochhar started last year, she put in her papers on October 8, 2018 and the bank accepted her plea. An internal bank enquiry took place and defended Kochhar subsequently. The ICICI Chairman MK Sharma said that the Board at ICICI did not see any conflict of interest since the Videocon group was not an investor in Kochhar’s husband’s company. Therefore, there was no need for Kochhar to recuse herself from the committee that sanctioned the loan to Videocon. Sharma claimed that Chanda Kochhar had made all the necessary disclosures and that the committee contained several many independent directors and was not chaired by her

However, due to the persistent hullaballoo surrounding the issue, the bank finally agreed to launch an independent probe by Justice Srikrishna. The Justice Srikrishna committee then found out that Kochhar has indeed violated the code of conduct, by not recusing herself from the committee that sanctioned loan to Videocon and not making the required disclosures under the company code.

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Chanda Kochhar’s Sacking

On January 30, 2019, a panel headed by Justice BN Srikrishna indicted former MD and CEO Chanda Kochhar for violating the bank’s code of conduct in the Videocon loan case. The ICICI Bank’s Board said it will treat her separation as ‘termination for cause’ under their internal policies.

Chanda Kochhar said she is “disappointed, hurt and shocked” by ICICI Bank’s decision 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”.

The Present Situation

On January 24, 2019, the CBI filed an FIR against Kochhar, Deepak Kochhar and Venugopal Dhoot and firms including Nupower Renewables and Videocon Industries for allegedly cheating ICICI Bank of Rs 1730 crore until March 2012.
Now, Chanda Kochhar might have to repay the ICICI Bank around Rs 350 crore. She might have received up to Rs 343 crore in employee stock options and 10 crore as cash bonus. Reportedly, 94 lakh shares were also issued to Kochhar between FY09 and FY18. It, however, is still not clear as to how many of those options had been exercised and vested, and how many are yet to vest.