Yesterday, a senior BJP leader tweeted "CBI should probe in ICICI loan scam Avista Advisory which got 5% on every big loan for certification. AVista [sic] is owned by a relative of..." What he left unsaid was that Avista Advisory's founder and CEO Rajiv Kochhar is ICICI Bank CEO and MD Chanda Kochhar's brother-in-law (her husband's brother). Today, The Indian Express reported that over the past six years, the Singapore-based financial services company got the mandate to restructure foreign currency-denominated debt deals worth over USD 1.7 billion of seven companies, all of which had taken loans from ICICI Bank at the same time.
For instance, Jaiprakash Associates engaged Avista last year for the restructuring of its foreign currency convertible bonds (FCCB) worth USD 110 million. At that time, ICICI Bank was reportedly the lead bank in the consortium that gave loan to Jaiprakash Associates.
The daily added that Avista also acted as "Debtor Advisor" in the restructuring of USD 200-million FCCBs of Jaiprakash Power Ventures Ltd. ICICI Bank was not only a lender to the latter but also received equity under the corporate debt restructuring package. A similar story played out with GTL Infrastructure in 2012. Avista's website also mentions two loan restructuring deals involving the Videocon Group - which is under the CBI scanner currently over allegations of a quid pro quo loan of Rs 3,250 crore extended by ICICI Bank over five years ago - in 2015 and 2016.
In response, Rajiv Kochhar told the daily that "The entire process of selection of 'Debtor Advisor' was competitive... Since the FCCB restructuring transaction did not involve any negotiations between the Companies and the 'Domestic Lenders/ICICI Bank', there is no conflict of interest of whatsoever nature." He added that "there were no dealings with ICICI Bank at all in any of the above transactions... We would like to clarify that in the restructuring cases handled by Avista Advisory, the firm has not interacted with ICICI Bank in any manner or form. Further during the course of the restructuring transactions Avista has not raised or mobilized any funds for its clients from ICICI Bank."
The report adds that ICICI Bank also denied any linkages as alleged, saying "We would like to categorically state that ICICI Bank has never engaged Avista Advisory Group for any services at all". Significantly, the spokesperson pointed out that "the brother of a husband does not fall within the definition of a "relative" under the Companies Act, 1956 or 2013 or the Rules thereunder," and hence its officials did not need to make any disclosure of any such relationship. "In view of all the above, your insinuation of conflict of interest is totally baseless and malafide in intent," added the spokesperson.
Incidentally, in a BSE filing yesterday, the bank stated that "We confirm that ICICI Bank has not received any communication from the Enforcement Directorate relating to any enquiry into the loan to Videocon Group as on date." This was in response to a clarification sought by the Exchange on media reports claiming the same.