ICICI Bank, its CEO and Managing Director Chanda Kochhar, and Videocon Group and its promoter Venugopal Dhoot, grabbed the all headlines in the banking sector during the week.
Many allegations and questions have been raised after a blog post by a ‘whistleblower’ alleged that Dhoot provided Rs 64 crore to a firm promoted by Chanda Kochhar’s husband Deepak Kochhar six months after Videocon Group secured a Rs 3,250 crore as loan from ICICI Bank in 2012. The amount was part of the Rs 40,000-crore loan that Videocon Group secured from a consortium of 20 banks led by SBI.
The Central Bureau of Investigation (CBI) on Saturday confirmed media reports that a preliminary enquiry has been registered against Deepak Kochhar and Videocon Chairman Venugopal Dhoot.
Many questions still remain despite ICICI Bank ruling out any conflict of interest. The bank said it has made adequate disclosures and satisfactorily replied to the regulator (RBI) after it intervened in the matter, as indicated by Chairman MK Sharma.
There are many questions that beg for an answer. Did the board’s review answer these questions?
- While ICICI Bank has said its board reviewed the internal process and gave a clean chit to Chanda Kochhar, it has not made public the nature of the review. On what basis did the board arrive at that conclusion?
- Was the due process followed in the review and over what period was it done?
- Why was the review not disclosed to the stock exchanges?
- Why was there no external investigation if the board had decided to review it?
- What were the concerns raised by the regulators? Sharma mentioned that the regulators had intervened and the board’s replies were ‘privilege information’.
- What were the disclosures, if they were made, by Chanda Kochhar before the loan approval process?
- Although Sharma claims Kochhar made ‘adequate disclosures’ as per regulatory requirements, was this made while or before the loan was approved. Also, was there a conflict of interest disclosure relating to her husband’s company’s dealings with Dhoot, which is a borrower of the bank.
- Were any disclosures of related companies made to the credit committee, in which Chanda Kochhar participated but was headed by the Chairman of ICICI Bank?
- Who was the Chairman at the time of loan approval and was the consortium of 20 banks aware of the disclosures?
The issue of a conflict of interest in loans approved by Chanda Kochhar-led ICICI Bank to the Videocon Group first came to light in 2016 when a whistleblower raised concerns which were similar to those in the Indian Express investigation.
Even as ICICI Bank Board has denied any possibility of influence by any of the bank’s employees or an individual on such loans, it is hard to believe that a CEO’s decision does not hold much weight.
Dealings between Deepak Kochhar’s NuPower Renewables and Venugopal Dhoot owned Videocon Group
- The most pertinent question remains why did Dhoot co-found the company and a month later exit it?
Moneycontrol reached out to Dhoot and he denied any connection with NuPower after exiting the JV in January 2009. Dhoot said he exited the venture because he wants to focus on his oil business, which was doing very well and “renewable energy and conventional energy cannot go together. We invested initially because, at that time, it was fashionable to be in renewable energy.”
- What was the nature of business transactions between Deepak Kochhar’s renewable energy company and the Videocon Group?
- Where did the Rs 64 crore loan given by Dhoot-owned Supreme Energy Pvt to NuPower come from? Why was it given?
- What was the reason behind the transfer of 94.99 percent shareholding from Deepak Kochhar to Dhoot in 2010?
- Why did Dhoot transfer his shareholding to associate Mahesh Chandra Punglia in November 2010, who then over a period of three years transferred the shareholding back to Deepak Kochhar?
- How was the valuation of the final stake transfer (valued at Rs 9 lakh according to the Indian Express report) arrived at?
Denying most dealings, Dhoot said, “Videocon Group has no connection with NuPower and I have not given any money to the company. It is not in any of our books. Barring the initial investment of Rs 2.5 lakh and selling it back, we are not involved. We don’t know who invested in NuPower after that.”
On Thursday, an Indian Express report blew the lid on the entire issue. It alleged that Dhoot offered Rs 64 crore in 2010 through a fully owned entity to NuPower Renewables Pvt (NRPL), which he had set up in a 50:50 joint venture with Deepak Kochhar and his two relatives in December 2008.
A month later Dhoot resigned as director of NuPower and transferred his shares in the company to Kochhar. In 2010, an entity owned by Videocon Group Promoter Venugopal Dhoot loaned Rs 64 crore to NuPower Renewables in 2010.
Another round of transactions between 2010 and 2013 led to an effective transfer of shareholding from Dhoot to Deepak Kochhar for a sum of Rs 9 lakh, the Indian Express report suggests.Podcast | All you need to know about ICICI Bank-Videocon controversy