Kochhargate: A litmus test for CBI

Last week, a special court remanded former MD and CEO of ICICI Bank Ltd Chanda Kochhar, her husband Deepak Kochhar and Videocon Group promoter Venugopal Dhoot to 14 days of judicial custody. Chanda is lodged in Byculla women’s prison and her husband and Dhoot in Arthur Road Jail.

The two-week judicial custody followed their arrest by the Central Bureau of Investigation (CBI) in connection with alleged fraudulent grant of loans by ICICI Bank to a few Videocon Group entities.

The latest development has all the elements of a Netflix thriller — shock and surprise. Shock for the Kochhars, preparing for their son’s wedding in Jaisalmer in mid-January, and surprise for the onlookers.

On January 22, 2019, the CBI had filed its FIR, alleging criminal conspiracy, cheating, a public servant taking illegal gratification, criminal misconduct, and abuse of official position. It alleged a quid pro quo — ICICI Bank sanctioned Rs 3,250 crore to Dhoot’s group companies and Dhoot, in turn, invested Rs 64 crore in Deepak’s NuPower Renewables Ltd.

ICICI Bank sanctioned six high-value loans to the Videocon Group between June 2009 and October 2011, violating the norms of loan sanction; Chanda was one of the members of the sanctioning committee, the FIR stated.

Why did the investigative agency take so long to arrest her? Has it come across any new evidence to nail the trio?

Till the arrests, most of us, probably the Kochhars and Dhoot too, felt that this is yet another banking scam done and dusted. Apparently, no urgency was seen from any quarter to move the case to its logical conclusion. It was not the CBI alone, which was keeping quiet. (Or, working quietly.) A media report last month said the Securities and Exchange Board of India (Sebi) has not taken any decision on the show cause notice it had issued to the bank and Chanda in 2018 regarding violations of certain norms relating to disclosure and obligations of listed entities and their key managerial personnel.

Of course, many things have happened between 2018 and now.

For instance, in November 2022, the Bombay High Court dismissed Chanda’s application, seeking contractual obligations promised by the bank to her ahead of her early retirement. The court also ruled that termination of her tenure by the bank was prima facie valid.

Weeks later, the Supreme Court declined to interfere with the Bombay High Court order.

In March 2020, a division bench of the Bombay High Court had dismissed her petition, challenging the termination of her employment by ICICI Bank, calling it “illegal, untenable, and unsustainable in law”. The bank also denied her remuneration and clawed back all the bonuses and stock options between April 2009 and March 2018 for her alleged role in granting out-of-turn loans to the Videocon Group, which benefitted her husband.

She lost this case but won one at a Delhi court in November 2019, which stayed the release of a biopic on her. The producers of Chanda: A Signature that Ruined a Career were restrained from screening the movie online, or offline.

Chanda could thwart the alleged attempt to “vilify” her but the real-life movie is no less exciting. Its first scene was enacted in July 2016 when an Infra Live magazine article, “Kochhar’s Renewable Empire”, alleged that Deepak Kochhar had a dubious business relationship with Dhoot’s Videocon Group. Deepak’s smiling cutout was on the magazine cover.

More than two years later, Chanda had to leave the bank for violation of code of conduct. Three months after she resigned, in January 2019, the bank’s board terminated her service for her failure to deal with a conflict of interest (not recusing herself from credit committee meetings that took a call on giving loans to Videocon) and lack of disclosure (of her husband’s business links with Videocon).

Chanda was “disappointed, hurt and shocked” at being treated this way after serving India’s second-largest private bank by assets for 34 years with “dedication and hard work”. Proud of her “honesty, dignity and integrity”, she was certain that “truth will ultimately prevail”.

This was Chanda’s first reaction after the bank sacked her and asked her to return her bonuses earned and denied her stock options. She moved court in November 2019.

The Infra Live report was based on a letter written by Arvind Gupta, a shareholder activist and the founder and trustee of the Indian Investors Protection Council. He was a shareholder of both Videocon and ICICI Bank. The letter raised many questions about the financial links between Chanda’s husband and Videocon’s Dhoot, and her role in the bank giving loans to the Videocon Group.

Then ICICI Bank Chairman M K Sharma appointed law firm Cyril Amarchand Mangaldas (CAM) to advise him on this matter. The firm gave her a clean chit. The Reserve Bank of India, which also conducted a probe, didn’t find anything wrong in the process of the loan disbursements, but pointed out that the business relations between Deepak and Dhoot spread beyond the shores of India.

By January 2018, the CBI got into the act. The Indian Express front-paged a report on the Deepak-Videocon relationship in March. This time around, an anonymous whistle-blower wrote a much more elaborate letter, listing many alleged misdoings of Chanda and her family. That brought Sebi into action and Chanda was forced to disclose her husband’s business relations with the Videocon Group.

This led to the appointment of retired Justice of Supreme Court B N Srikrishna by the ICICI Bank board to conduct a comprehensive probe for the period between April 2009 and March 2018. CAM immediately withdrew its report as it was based on an assumption that no relationship between Deepak and Dhoot ever existed, as Chanda had never mentioned this before.

The rest, as they say, is history. On June 1, 2018, Chanda went on indefinite leave until a probe into her conduct by the Srikrishna Committee was complete. A little over a fortnight later, on June 18, ICICI Bank appointed Sandeep Bakhshi, MD of ICICI Prudential Life Insurance Co Ltd, as whole-time director and chief operating officer of the bank for five years, with immediate effect. In October, Bakhshi was made the MD and CEO and in January 2019, Chanda got the boot.

It will be interesting to watch how the CBI proves the allegations. The country’s premier investigative agency’s record in probing complex financial misdeeds is not exactly immaculate. Both Arun Jaitley and Piyush Goyal had, in the past, come down heavily on the CBI’s “investigative adventurism”.

Quite a few retired senior public sector bankers, in the not-so-distant past, had been arrested by our investigative agencies and thrown into Arthur Road Jail on J R Boricha Marg, Lower Parel, Mumbai, where they spent many sleepless nights in barracks for undertrials, on threadbare rugs laid out on concrete floors. Have the agencies been able to prove the bankers’ culpability? Have any of them been convicted?

In Chanda’s defence, one can always say, why would the Videocon Group take care of her husband as a quid pro quo to get a loan? After all, the group has taken money from the entire banking industry and ICICI Bank’s share in the pie is not even 10 per cent. So, if it had a quid pro quo with Chanda to get the money, it must have had similar arrangements with other banks, too. If this is not the case, one must accept that it had got money from all banks, including ICICI, without any under-the-table conditions.

As the boss, Chanda never waited for the lift at the bank’s headquarters. Someone would always be there to press the button and hold the lift when her blue Mercedes Benz E-Class E 350d entered the premises. The security department would ensure that she did not have to queue up for the lift while entering and leaving the office. And none else would be allowed with her to be in the lift. Will there be others to share the cell of the Padma Bhushan banker in Byculla women’s prison?

The writer, a consulting editor with Business Standard, is an author and senior adviser to Jana Small Finance Bank Ltd

His latest book: Pandemonium: The Great Indian Banking Tragedy  

To read his previous columns, log on to https://bankerstrust.in

Twitter: @TamalBandyo