(This article has been published from The Quint's archives in light of the Enforcement Directorate (ED) arresting Deepak Kochhar, husband of former ICICI Bank MD and CEO Chanda Kochhar, in the ICICI Bank-Videocon case.
According to reports, the ED claimed that it decided to take Deepak Kochhar – a businessman whose company reportedly received funds from Venugopal Dhoot of Videocon Group – into custody because he refused to cooperate. He has now been remanded to custody till 19 September by the special PMLA court.
The ED had filed a case under the money- laundering Act last year against Chanda Kochhar, Deepak Kochhar, Venugopal Dhoot, and others to probe alleged irregularities and corrupt practices in sanctioning of Rs 1,875-crore loans by ICICI Bank to the corporate group. This ED action was based on a CBI FIR.)
The CBI had filed an FIR on 25 January 2019 in connection with alleged irregularities in the ICICI Bank-Videocon loan case, naming Chanda Kochhar as an accused in the case.
The storm, however, has been brewing since March 2018 with ICICI Bank and Kochhar, being in the spotlight for all the wrong reasons. After supporting Kochhar for months, the bank, on 18 June 2018, had sent Kochhar on an indefinite leave, till the completion of an independent probe into the allegations made against her.
Additionally, independent activist and whistleblower Arvind Gupta had also levelled allegations of ‘quid pro quo deals’ by Kochhar, alleging that the Ruia brothers of the Essar group got undue favours from the bank for “round-tripping” investments into her spouse Deepak Kochhar’s NuPower Group.
So what had the CBI found out against Kochhar? What were the allegations? What had been her and the bank’s stance regarding the whole issue? And what were the authorities doing? Here, we attempt to briefly address all these questions.
How Kochhar Defrauded ICICI Bank: CBI’s Version
The alleged fraud was perpetrated by Kochhar with her husband Deepak Kochhar and Videocon promoter Venugopal Dhoot.
The original Preliminary Enquiry dated 8 December 2017 was registered on the allegations that ICICI Bank Ltd sanctioned credit facilities of about Rs 3,250 crores to Trend Electronics Ltd., Century Appliances Ltd, Kail Ltd, Value Industries Ltd and Evan Fraser and Co India Ltd, all companies belonging to the Videocon Group promoted by Dhoot.
The officials of ICICI Bank Ltd sanctioned credit facilities to these companies in violation of the Banking Regulation Act, RBI Guidelines and Credit Policy of the bank. It was also alleged that as a part of the quid-pro-quo, Dhoot made an investment of Rs 64 crore in Nupower Renewables Ltd (NRL) through Supreme Energy Pvt Ltd (SEPL) and also transferred SEPL to Pinnacle Energy Trust managed by Deepak Kochhar through a circuitous route between 2010 to 2012.
The outcome of the enquiry revealed: "That during June2009 to October-2011, ICICI Bank had sanctioned six high value loans to various Videocon Group companies. On 26 August 2009, RTL of Rs 300 crore was sanctioned to Videocon International Electronics Ltd. (VIEL) in contravention of the rules and policy by the sanctioning committee. Chanda Kochhar was one of the members of the sanctioning committee, who in a criminal conspiracy to cheat ICICI Bank and in pursuance of criminal conspiracy on 26 August 2009, dishonestly by abusing her official position, sanctioned this loan in favour of VIEL.”
"It is further revealed that on 7 September, 2009, this loan was disbursed to VIEL. On the very next day, ie, on 8 September 2009, Dhoot transferred an amount of Rs 64 crore to NRL managed by Deepak Kochhar husband of Chanda Kochhar from Videocon Industries Ltd. (VIL) through his company SEPL. This was the first major capital received by NRL to acquire its first power plant. Thus, Chanda Kochhar got illegal gratification and undue benefit through her husband from VIL Dhoot for sanctioning RTL of Rs 300 crore to VIEL.”
What Were the Allegations and How Did They Come About?
The case which had brought much infamy to Chanda Kochhar stems primarily from the loans worth Rs 3,250 core that ICICI bank had allegedly granted to the Videocon Group in 2012. This was a part of the loans worth Rs 40,000 granted to Videocon by a consortium of 20 banks.
The allegations against Kochhar had primarily been highlighted and detailed in two complaints. The first was a 2016 letter by Arvind Gupta, an investor in both ICICI Bank and Videocon Group, which had alleged that the loans to the Videocon Group pointed to Kochhar’s conflict of interest since the former’s chairman, Venugopal Dhoot, had business dealings with Chanda Kochhar’s husband, Deepak Kochhar.
Though Gupta had posted the letter he had written to PM Modi in a blog post in October 2016, neither did the ICICI Bank respond to the letter nor did it conduct any public investigation at that time, BloombergQuint had reported.
The RBI probed the matter after the letter became public, but didn't find any material against ICICI Bank's management. The regulator then sent the matter to the Finance Ministry with a note saying that further investigations were needed, it was further reported.
Meanwhile, the second complaint which levelled serious charges against Chanda Kochhar was that of an anonymous whistleblower. Notably, ICICI Bank's recent decision to conduct an independent probe was based on this whistleblower's complaint.
While the bank had not revealed the details of this complaint, it has reportedly said that the whistleblower had alleged 'quid pro quo' in the course of Chanda Kochhar's work in dealing with certain customers/borrowers of the bank.
What Were Deepak Kochhar's Alleged Business Dealings With Venugopal Dhoot?
The business dealings between Venugopal Dhoot and Deepak Kochhar that the complaint had referred to centred around the company, NuPower Renewables (NRPL), that was set up in 2008. At that time, both Deepak Kochhar and Dhoot were equal share-owners in the company.
Since 2008, NRPL was at the centre of several financial transactions with a web of firms, most notably a company called Supreme Energy linked to Dhoot, and another firm called Pinnacle Energy associated with Deepak Kochhar.
It was these transactions, alongside the loan that was granted to the Videocon Group by ICICI Bank, that had formed the basis of conflict of interest allegations that were raised.
What Had Been the Bank and Chanda Kochhar's Stance On the Issue?
When the allegations against Chanda Kochhar had first surfaced in the media, the ICICI Bank board had initially asserted the full faith it had in the MD and the CEO.
The board had termed allegations of conflict of interest as "malicious and unfounded rumours", adding that the decision to lend to Videocon Group was taken at the consortium level. Even though was part of the lending committee that approved the loan, she did not have any personal stake in it, the board’s statement had said, fully backing the MD and CEO, reported BloombergQuint.
On Kochhar's part, she’d told the media that she had nothing to add to the board's position, which was of unequivocally supporting her.
However, things took a U-turn later, when the board announced its decision to conduct an independent inquiry into the whistleblower’s complaint alleging impropriety by Chanda Kochhar. The board then confirmed that it was sending Kochhar on indefinite leave till the conclusion of the inquiry. Kochhar had been asked to leave her office on 18 June.
What Did the Authorities Do?
As the controversy centred around ICICI Bank and Chanda Kochhar had surfaced, it did not take much time for the CBI and the Income Tax Department to spring into action.
In March 2018, the CBI had kicked off a preliminary inquiry into the matter, naming Deepak Kochhar, the Videocon Group and unknown others. Deepak Kochhar and his brother Rajiv Kochhar had also been questioned by the CBI.
In addition to this, Deepak Kochhar's NuPower Renewables had been served a tax notice in April.
The Security and Exchange Board of India (SEBI) had also taken action in the matter, as it first sought a clarification from Chanda Kochhar and the bank regarding the conflict of interest allegations, and then later served a show-cause notice to her for non-adherence to listing norms.
(With inputs from BloombergQuint, PTI and Business Standard.)
(This article was last published on 25 January 2019.)
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