Chanda Kochhar and ICICI Bank Controversy Explained: Breaking Down Chanda Kochhar’s ‘Improprieties’ at ICICI Bank

On Thursday, 24 January, the CBI registered an FIR in connection with alleged irregularities in the Rs 3,250 crore ICICI Bank-Videocon loan case. The investigating agency also named Chanda Kochhar, former CEO of ICICI bank, as accused in the loan 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 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 has the CBI found out against Kochhar? What are the allegations? What has been her and the bank’s stance regarding the whole issue? And what have the authorities been doing? Here, we attempt to briefly address all these questions.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: "That during June-2009 to October-2011, ICICI Bank had sanctioned six high value loans to various Videocon Group companies. On 26 August 26 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 i.e. 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.”The case which has brought much infamy to Chanda Kochhar over the last two months 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 have primarily been highlighted and detailed in two complaints. The first is 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, reported BloombergQuint.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 levels serious charges against Chanda Kochhar is that of an anonymous whistleblower. Notably, ICICI Bank's recent decision to conduct an independent probe is based on this whistleblower's complaint.While the bank has 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.The business dealings between Venugopal Dhoot and Deepak Kochhar that the complaint refers to centres around a company called 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 formed the basis of conflict of interest allegations that have been raised.When the allegations against Chanda Kochhar first surfaced in the media in March this year, the ICICI Bank board initially asserted the full faith it had in the MD and the CEO.The board 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 said, fully backing the MD and CEO, reported BloombergQuint.On Kochhar's part, she 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 on 30 May, when the board announced its decision to conduct an independent inquiry into the whistleblower’s complaint alleging impropriety by Chanda Kochhar. Additionally, on 18 June, the board confirmed that it was sending Kochhar on indefinite leave till the conclusion of the inquiry. Kochhar was asked to leave her office on 18 June.The board has asserted that the inquiry would be headed by an independent and credible outsider, and assured necessary independent legal and professional support for the same.As the controversy centred around ICICI Bank and Chanda Kochhar surfaced in March, it did not take much time for the CBI and the Income Tax Department to spring into action.On March 31, the CBI kicked off a preliminary inquiry into the matter, naming Deepak Kochhar, the Videocon Group and unknown others. Deepak Kochhar and his brother Rajiv Kochhar have also questioned been questioned by the CBI since then.In addition to this, Deepak Kochhar's NuPower Renewables was served a tax notice on 3 April.The Security and Exchange Board of India (SEBI) has 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.)(The Quint will no longer be on WhatsApp, owing to changes in its policies regarding news publishers. You can now get the latest news updates on our Telegram channel. For handpicked stories every day, subscribe to us on Telegram.)