Chanda Kochhar’s husband Deepak Kochhar has been arrested under ICICI bank and Videocon loan case by the Enforcement Directorate (ED) in an alleged money laundering case against the loan transactions of ICICI Bank and the Videocon group.
According to the Enforcement Directorate, Deepak Kochhar was arrested due to his lack of cooperation in the investigation. Mr Kochhar is due for a hearing in an anti-money laundering court in Delhi today.
The initially blown whistles; speculations and notices
Speculation regarding the breach of the code of conduct between ICICI bank and the Videocon group surfaced in 2016, when Arvind Gupta, a shareholder of both ICICI Bank and Videocon Group, published a blog raising concerns about the practices taking place in both companies.
In 2016, Arvind Gupta alleged that Chanda Kochhar, the former managing director and chief executive officer of ICICI Bank, regulated a loan of Rs 3,250-crore to the Videocon group in 2012. He also alleged that the loan was given out in the exchange of a deal with a clean-energy firm run by her husband Deepak Kochhar called NuPower Renewables along with Supreme Energy.
Two years later, an anonymous person alleged an intentional delay between the years 2008 and 2016 in recognising damage to 31 loan accounts to reduce the bank’s provisioning costs, by the ICICI bank and its management, including Chanda Kochhar.
This time, the Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED) responded to the allegations and launched an inquiry into the matter. The CBI also launched a private inquiry and interrogated Chanda Kochhar’s husband, Deepak Kochhar, and brother Rajeev Kochhar about the allegations.
ICICI Bank chairman, MK Sharma, responded to the claims, expressing full faith in Chanda Kochhar and issued a statement calling the allegations “robust” after an internal inquiry into the matter. ICICI Bank pointed out that even though Chanda Kochhar was present on the committee that approved the loan, she did not have any personal take on the matter.
In a press meeting, MK Sharma told the press that, “The board has come to the conclusion that there is no question of any quid pro quo/ nepotism/ conflict of interest as is being alleged in various rumors,” He further added that, “ICICI Bank was not the lead bank for this consortium and the bank only sanctioned its share of facilities aggregating approximately Rs 3,250 crore which was less than 10 percent of the total consortium facility in April 2012”.
M.K Sharma added, “It can be concluded that there are adequate checks and balances in loan appraisal, rating and approval processes within the bank, both from a control as well as from a governance perspective.”
ICICI Bank later issued another statement denying NuPower and ICICI Bank links as none of the company’s investors borrowed any money from the bank.
Investigations and resignations
After the banks issued a statement in support of Chanda Kochhar and claims of the rightful passage of loans to the Venugopal Dhoot led Videocon, the SFIO took permission from the Ministry of Corporate Affairs to start an investigation into the 2012 loan deal.
On 23rd May 2018, The Securities and Exchange Board of India (SEBI) sent a notice to Chanda Kochhar to provide all the information regarding the Videocon Group loan dealings and also to the NuPower Renewables for the acquirement of all the lender dealings of the entity.
The SEBI market regulator served a 12-page show-cause notice to Chanda Kochhar and the ICICI bank with a submission deadline on 7th June 2018.
As the investigation was put in place, the ICICI bank launched its own independent internal investigation into the matter. The ICICI bank invited a retired Judge of the Supreme Court of India, Justice BN Srikrishna, to head the investigation.
During the ongoing internal investigation, Chanda Kochhar and the ICICI bank failed to respond to the show-cause notice until the deadline, due to the lack of documentation proof.
SEBI extended Kochhar’s deadline until 10th July 2018.
During the investigation, Chanda Kochhar applied for an early retirement, which was accepted by the ICICI bank board. The bank later assured that it would not affect the internal investigation in any way, and whatever the outcome may be, action would be taken accordingly.
The final verdict of the internal committee looking into the matter, headed by Justice BN Srikrishna, reported that Chanda Kochhar did violate the bank’s code of conduct in the Videocon loan case. The bank then concluded that it would view Kochhar’s separation from the company as “termination for cause,” according to internal policies.
CBI files FIR against Venugopal Dhoot and Deepak Kochhar
In January 2019, the Central Bureau of Investigation (CBI) filed a First Information Report (FIR) against Venugopal Dhoot, the chairman of the Videocon group, and Deepak Kochhar, Chanda Kochhar’s husband. The FIR was filed out of concern for the Rs. 3,250 crore loan agreement between ICICI Bank and Videocon Group.
The CBI alleged that Venugopal Dhoot invested the entire loaned amount in NuPower Renewables and Supreme Energy, a firm owned by Deepak Kochhar, just a couple months after its approval.
Raids were conducted by the CBI in the Mumbai offices and homes of Venugopal Dhoot, Deepak Kochhar, and Chanda Kochhar. The CBI revealed that during the two-year term, from June 2009 to October 2011, six high-value loans were permitted from ICICI Bank to the Videocon Group. This was a short while after Chanda Kochhar took over the position of the Managing Director (MD) of the ICICI Bank in May 2009.
Companies NuPower Renewables (NRL) and Supreme Energy Private Limited (SEPL) were also booked in for the investigation. The SEPL was initially owned by Venugopal Dhoot, who became a 94.99% shareholder of NRL within a year. Later, the shares were sold to Deepak Kochhar and eventually from him and his relatives to SEPL. Eight months later, Dhoot transferred all his remaining shares to the company where Deepak Kochhar was a trustee.
RBI steps in and files a report
A report submitted by the Reserve Bank of India (RBI) stated that RBI was informed about over Rs. 320 crores in five tranches of the NRL, the company owned by Deepak Kochhar.
It also stated that RBI was unsuccessful in tracking the origin of funds raised by the company between march 2011 and march 2012.
ICICI Bank recovery suit against Chanda Kochhar.
After Chanda Kochhar’s resignation from the post of MD and CEO from the bank was turned into a ‘termination for cause’ by the bank, Chanda Kochhar filed a suit against the bank in the Bombay High Court. Her suit was based on ICICI terminating her employment after accepting her request for early retirement.
During the court hearing of the suit filed by Kochhar, her lawyer came to know about the counter-suit filed by ICICI Bank. According to the bank, since ICICI is a private bank and is headed by a board of directors, Ms Kochher’s suit was not maintainable.
ICICI Bank also submitted a 28-page response, stating that Kochhar’s termination was a result of a lack of disclosure.
ICICI Bank’s recovery suit against the former MD and CEO of the bank, Chanda Kochhar, seeks recovery of around Rs. 12 crores that Ms Kochhar received as part of the bonus and other benefits before her termination. According to the bank, the bonus was imbursed between April 2006 and March 2018.
2020 and final decisions regarding the case
In January of this year, the ED attached a recovery of assets worth more than Rs. 78 crore in the possession of Chanda Kochhar and her family. Some of the assets that were recovered by the ED included her Mumbai residence.
Three months later, the Bombay High Court dismissed Ms. Kochhar’s case against the ICICI Bank, stating that Ms. Kochhar was terminated after her voluntary resignation.
During the same time, CBI booked Venugopal Dhoot, the former chairman of the Videocon Group, for cheating multiple banks of millions of rupees.
On Monday, September 7, came the arrest of Deepak Kochhar by the ED after questioning him for the last time. The agency states that it has found enough evidence against Deepak Kochhar to put the arrest in place.
The investigation into the Kochhar family and Venugopal Dhoot in the money laundering case is still going on, conducted by the income tax department, CBI, ED, and SFIO.