The panel found Kochhar's actions in the Videocon loan case in violation of the bank’s code of conduct.
A panel headed by Justice BN Srikrishna has found the actions of ICICI Bank former MD and CEO Chanda Kochhar in the Videocon loan case in violation of the bank’s code of conduct.
Following the report, the bank's board has decided to retrieve all bonuses paid to Kochhar from April 2009 till March 2018. ICICI Bank also said the board will treat her separation as 'termination for cause' under their internal policies.
The head of enquiry BN Srikrishna was assisted by a law firm and a forensic and investigative services firm for the conduct of the enquiry.
Also Read: ICICI Bank Q3FY19 profit down 3 percent
Shareholder whistleblower Arvind Gupta was the first to raise concerns in October 2016 through a blog, alleging impropriety in loan-related decisions made by Chanda Kochhar. He also alleged quid pro quo in the approval of loans given to Videocon Group, whose promoter had business dealings with Kochhar's husband Deepak.
At the end of March 2018, the bank stated that it had reviewed internal processes for credit approval and ‘found them to be robust’. Later, the bank’s board also expressed full faith in Kochhar, denying any wrongdoing on her part and ruling out any ‘conflict of interest’. However, after a second whistleblower complaint emerged, the board changed its stance and instituted an independent inquiry on May 30.
The bank in a statement to the exchanges said the enquiry report found her in violation of the ICICI Bank Code of Conduct, its framework for dealing with conflict of interest and fiduciary duties, and in terms of applicable Indian laws, rules and regulations. The enquiry report concluded that her lack of diligence with respect to annual disclosures led to the bank’s processes being rendered ineffective by her approach to such disclosures and avoidance of conflict.
The bank board has also decided to revoke all her existing and future entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested & unexercised stock options, and medical benefits. The bank could also take further actions as may be warranted in the matter.
The bank clarified that there are no implications of the enquiry report on its published financial statements for the relevant periods.
What the bank said in the past
In June 2018, ICICI Bank had said it will institute an independent enquiry to examine the merit of the complaint against its CEO Chanda Kochhar on the alleged conflict of interest while giving loans. In the same month, it appointed retired Supreme Court judge Justice BN Srikrishna to head the independent panel initiated by ICICI Bank’s board.
Subsequently, on October 4 ICICI Bank board accepted Chanda Kochhar’s request to seek early retirement. The bank said that the enquiry instituted by the board will remain unaffected by this and certain benefits will be subject to the outcome of the enquiry.
CBI initiates case
The Central Bureau of Investigation (CBI) a statement on January 24 had said that they have registered a case against Kochhar and several others against a loan sanctioning case. The CBI statement said it was alleged that on August 26, 2009, a loan of Rs 300 crore was sanctioned to a Mumbai-based private company in contravention of the rules and policy by the sanctioning committee.
“It was further alleged that the then MD & CEO, ICICI Bank, being the head of the sanctioning committee, who in criminal conspiracy with other accused to cheat ICICI Bank, dishonestly and by abusing her official position sanctioned this loan in favour of said Mumbai based private company,” said the CBI statement.From June 2009 to October 2011, another five loans amounting to Rs 1,575 crore were also reported to have been sanctioned to said group companies by various sanctioning committees of ICICI Bank in violation of credit policy of the bank. The existing outstanding in the accounts of these private group companies were adjusted in rupee term loan of Rs 1,730 crore sanctioned by ICICI Bank under refinance of domestic debt under consortium arrangement on April 26, 2012. From June 30, 2017, the account of Mumbai-based private company (Videocon) and its group companies was declared non-performing asset.The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .