One signature. One ill-advised signature. In the end, one of Indian banking’s most controversial chapters can be telescoped to that one signature.
That signature in 2012 cost Chanda Kochhar everything she held dear. Blown to smithereens was an A-list reputation as an ace banker — something she had painstakingly built over three decades of hard work. Jeopardised were the prospects of a gracious exit from ICICI Bank, one of India’s largest. Torn asunder were chances of a lucrative career thereafter.
If these weren’t enough, more worryingly for Kochhar now is that the long arm of the law has finally reached her doorsteps. On September 7, her husband, Deepak Kochhar, a businessman was arrested.
All because of one imprudent signature.
It was in 2012 that a credit committee of ICICI Bank in which Chanda Kochhar was a member in her capacity as CEO signed a letter sanctioning a loan to Videocon promoter Venugopal Dhoot. ICICI was part of a consortium of more than 20 banks and financial institutions that disbursed the loan of Rs 40,000 crore to consolidate debt and expand into oil and energy. India’s third biggest lender ended up loaning Rs 3,250 crore to Dhoot’s business.
ICICI Bank’s loan was influenced by Kochhar, who though didn’t head the credit committee was highly influential in the bank’s credit decisions, according to investigators. The case of conflict of interest, quid pro quo and nepotism were clear, they concluded.
Kochhar’s husband, Deepak Kochhar, had deep business interests with Videocon’s Dhoot. NuPower Renewables, his little-known company, benefitted significantly from Videocon’s investments in the firm in exchange of a loan given to the group by ICICI Bank.
Kochhar allegedly hid this vital information from the bank’s credit committee or the committee pretended not to know about this major conflict of interest, according to investigators.
Kochhar has denied any wrong doing.
A series of complex deals between Dhoot and Kochhar’s firm conducted between 2008 and 2012 had all the marks of a classic quid-pro-quo deal. Investigators concluded that the ace banker, who is a Padma Bhushan awardee, grossly misused her professional position to favour her husband’s business.
For latecomers to the case, here is how the chain of events in the infamous quid-pro-quo deal unfolded.
In 2008, Dhoot floated an equal joint venture named NuPower Renewables with Deepak Kochhar. He lent Rs 64 crore to the firm and later transferred the entire stake to Deepak Kochhar, according to the CBI.
In 2012, ICICI Bank loaned Rs 3,250 crore to the Videocon group companies as part of a Rs 40,000-crore consortium loan deal. The CBI says the two deals are connected.
What did the Kochhars get back in turn?
Not just the investment from Videocon’s Dhoot. Kochhar family had other gains as well from the loan , investigations have showed. According to investigations pursued by the Enforcement Directorate (ED), the Kochhars acquired an apartment in Mumbai owned by one of the Videocon group companies, by way of acquiring that company through her family trust at a nominal price by creating book entries.
Accordingly, proceeds of crime totalling Rs 78.15 crore, which included Rs 74.54 crore held in the name of NRPL and its subsidiaries, the flat in Mumbai with a book value of Rs 3.5 crore, and an amount of Rs 10.5 lakh seized from a company of Deepak Kochhar, have been provisionally attached by the ED under PMLA.
The ICICI Bank Board’s role and approach in this case is questionable throughout the case.
Remember, the ICICI Board initially gave a clean chit to Kochhar and defended her in the case in March, 2018 before finally agreeing for an internal probe. The hurried clean chit for a suspected official from the board raised eyebrows at that point.
“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 & CEO, Ms. Chanda Kochhar,” the bank had then said in its statement.
“The board also commends the entire management team under the leadership of the MD & CEO for their hard work and dedication. We would urge you not to be misled by these rumours which are being spread to malign the bank and its top management,” the statement said.
After the CBI and ED case, Chanda Kochhar had resigned as MD and CEO of ICICI Bank on October 4, 2018. How did the board know that Kochhar was innocent in the case even before an enquiry? Shouldn’t Kochhar have stayed away from the credit committee given that her family had business dealings with the borrower? The board was silent on these critical questions.
“Deepak Kochhar’s arrest indicates that investigators have strong evidence regarding beneficiaries of the questionable dealings. This should pave the way for further proceedings and prosecution of other players including possibly Chanda Kochhar,” said Naresh Malhotra, an independent banking consultant.
Deepak Kochhar’s arrest is significant but is only one part of the whole story. The CBI FIR names Chanda Kochhar, Videocon’s Venugpal Dhoot and several top executives of ICICI Bank at that point. These include KV Kamath, Zarin Daruwala, N S Kannan, Sandeep Bakshi, K Ramkumar, Sonjoy Chatterjee, Rajiv Sabharwal and Homi Khusrokhan.
“These loans turned NPA resulting in wrongful loss to ICICI Bank and wrongful gains to the borrowers and the accused persons. The role of these senior officers of the sanctioning committee may also be investigated,” the CBI FIR said.
Post Deepak Kochhar’s arrest, will Chanda Kochhar be the next in line? The ICICI-Videocon case is unlikely to end with Deepak Kochhar’s arrest. Names of Chanda Kochhar who played a key role in sanctioning loan to the Videocon Group, and the board members who gave a hurried clean chit to her without a probe and are mentioned in CBI FIR, could come up next.