The Securities and Exchange Board of India (SEBI) is set to begin adjudication proceedings against ICICI Bank and its CEO Chanda Kochhar for alleged violation of listing disclosure. The market regulator had initiated a preliminary enquiry into various disclosures made by ICICI Bank after various agencies started investigating the charges of conflict of interest and quid pro quo against CEO Chanda Kochhar.
It was alleged that the ICICI Bank CEO had favoured Videocon Group which in turn did some dubious transactions to benefit Chanda Kochhar's husband Deepak Kochhar.
According to a PTI report, the Sebi in its preliminary enquiry has found that there was conflict of interest in the transactions of ICICI Bank with Videocon. The report suggests that Chanda Kochhar has admitted that her husband Deepak Kocchar has had many dealings with Videocon Group over the last several years. She also admitted that Deepak Kocchar and Venugopal Dhoot were co-founders and promoters of NuPower.
In June 2009, shares of Dhoot and Pacific Capital (owned by Deepak Kocchar's father and sister-in-law) in NuPower were sold to Supreme Energy. Also, Dhoot continues to hold interest in NuPower through debentures of Rs 64 crore, subscribed through Supreme Energy, the Sebi found.
However, these details were not shared with the regulator. "By not disclosing the details of her husband's dealings with Videocon, Kochhar has not complied with the provisions of listing agreement. Further, the bank also failed in ensuring that its directors comply with listing rules," PTI quoted an official as saying. Therefore, adjudication proceedings have been recommended against ICICI Bank and Chanda Kochhar.
Once the proceedings are over and charges are proved, ICICI Bank may face a fine of up to Rs 25 crore and Chanda Kochhar's penalty may go up to Rs 1 crore under the relevant Sebi regulations. The report said that the adjudication process will start formally soon after taking into account the replies to the show cause notices issued by Sebi to ICICI Bank and its CEO.
On May 23, Sebi sent a 12-page notice to ICICI Bank and its CEO Chanda Kochhar seeking their response on the alleged non-compliance with norms in dealings with the Videocon Group and Nupower Renewables - a company co-founded by her husband Deepak Kochhar.
The whole controversy began after a whistleblower Arvind Gupta alleged a 'quid pro quo' in ICICI Bank's Rs 3,250 crore plus Rs 660 crore loans to Venugopal Dhoot-owned Videocon Industries. He had alleged that it was the time when an identical 10 per cent foreign funding (Rs 325 crore and Rs 66 crore) made its way to NuPower Renewables.
Following the developments, the Sebi initiated an enquiry into whether the bank's board was aware of the conflict of interest and sought an explanation on lapses in disclosures of business dealings involving Deepak Kochhar.