Once lauded for her role in shaping the retail banking sector in the country and establishing ICICI Bank during the 1990s, Chanda Kochhar seems to be caught in a swirl of nepotism and conflict of interest charges in the Rs 3,250 Videocon Group loan controversy even as the Board has expressed full faith and confidence in its managing director and chief executive officer.
ICICI Bank and Videocon Group investor Arvind Gupta had red-flagged the bank's lending practices and accused Kochhar of favouring the Venugopal Dhoot-led conglomerate in a letter addressed to Prime Minister Narendra Modi on March 15, 2016. Gupta accused Kochhar of favouring Videocon by approving two loans totalling around Rs 4,000 crore and "amassing wrongful personal gains deceiving stakeholders, shareholders, public/private sector banks and Indian regulatory agencies for unjust and illegal enrichment through corrupt banking practices".
According to Registrar of Companies filings, the ICICI chief's husband Deepak Kochhar and Dhoot set up a joint venture NuPower Renewables Pvt Ltd (NRPL) in December 2008. Dhoot, his family members and associates held 50 per cent stake in NRPL with the remaining shares owned by Deepak Kochhar and Pacific Capital, which was owned by his family.
A year later in January 2009, Dhoot resigned as NRPL director and transferred his around 25,000 shares to Deepak Kochhar. In March 2010, NRPL secured a loan of Rs 64 crore from a company called Supreme Energy Private Limited, which was owned by Dhoot. By end of March 2010, Supreme Energy took majority control of NRPL with Deepak Kochhar retaining only 5 per cent. Almost eight months later, Dhoot transferred his entire holding in Supreme Energy to his associate Mahesh Chandra Punglia. Around two years later, Punglia transferred his entire stake in Supreme Energy to Deepak Kochhar's Pinnacle Energy for Rs 9 lakh.
Now, serious questions have surfaced around the business partnership between Dhoot and Deepak Kochhar especially in the light of the bank's massive loan to the sinking company. Gupta told India Today, "We need to know why Deepak Kochhar and Dhoot formed a joint venture and then why did he [Dhoot] leave it. We need to know who are the real people behind the Mauritian company DH Renewables."
What aroused Gupta's suspicions was a flow of foreign funds to NRPL around the same time. ICICI Bank lent close to Rs 4,000 crore to the Videocon Group between 2010 and 2012, and DH Renewables pumped Rs 325 crore and Rs 66 crore into NRPL. ICICI Bank lent Rs 3,250 crore to five Videocon companies in April 2012 and quickly followed it by another loan of Rs 660 crore to a shell company on the Cayman Islands. ICICI has denied a quid pro quo in what is now a bad loan of Rs 3,250.
The bank's board stood by the CEO insisting that forensic audit isn't necessary for every loan and that Kochhar never headed the credit committee that sanctioned Rs 3,250 crore to Videocon. Both Deepak Kochhar and Dhoot also denied wrongdoing. Deepak Kochchar rejected allegations of share transfers to NRPL
While the ICICI Bank board has given a clean chit to CEO Chanda Kochhar, the questions left unanswered are:
1 What was Videocon's loan guarantee to ICICI Bank?
2 What was its credit score when the bank approved the loan?
3 Did Chanda Kochhar declare her husband's business association with Venugopal Dhoot?
4 Why was loan given to a firm in the tax haven of Cayman Islands?