ICICI Bank, the largest private lender, has decided to initiate an independent probe into the fresh allegations of 'conflict of interest' and 'quid pro quo' levelled by a whistle-blower against Chanda Kochhar, managing director and CEO of the bank. But the fact that she still continues to be in the office while the investigation is on has raised several eyebrows.
Former Sebi chairman M Damodaran told DNA Money that this step isn't enough and Kochhar should step down till the findings are completed. Only this, he said, would satisfy stakeholders that the inquiry is fair.
While welcoming the bank's move to conduct an independent inquiry, Damodaran said the process should not take long.
"It is good that the bank is getting an independent person to enquire. An internal inquiry is not the answer. During the inquiry, the MD & CEO must step aside. That is the standard procedure which will inspire confidence. That alone will satisfy the stakeholders that the inquiry is fair. The inquiry should not take too long and the absence of the MD during that period will not be disruptive," said Damodaran, the founder chairperson of a corporate governance advisory firm, Excellence Enablers.
On Wednesday, ICICI Bank said that it was acting on a new whistle-blower's complaint that flagged off concerns on Kochhar failing to adhere to the provisions relating to conflict of interest and alleged quid pro quo in the course of her work in dealing with certain customers of the bank. The fresh complaint was part of a letter that the bank received 10 days back.
In a regulatory filing, the bank said the inquiry would be headed by an "independent and credible person" to examine the complaint. "The scope of the inquiry would be comprehensive and would include all relevant matters arising out of and in the course of examination of the facts and, where ever warranted, the use of forensic or email reviews and recordal of statements of relevant personnel, etc," the bank statement said. It also added the probe would cover all connected matters in the course of the investigation to bring the matter to a final close.
ICICI Bank has also asked its audit committee to take all further actions in the matter to operationalise this decision, determining the terms of the reference of the inquiry, the period which will be covered by the inquiry, etc. The Audit Committee will also make necessary arrangements to assist the inquiry with independent legal and other professional support.
The move by the bank follows a recent notice served by the market regulator Securities and Exchange Board of India (Sebi) on Kochhar on dealings of the bank with Videocon Group and Nupower. Sebi questioned the bank on disclosures which had to be made on the case.
Damodaran was one among the first people to ask for an independent inquiry into allegations of conflict of interest levelled against Kochchar while sanctioning a loan worth Rs 3,800 crore to Videocon Industries.
The first complaint on the 'conflict of interest' matter was filed by a shareholder of the bank, Arvind Gupta, way back in 2016 when the board said that it has satisfied the banking regulator's queries. It even said that the points that Gupta raised were "malicious" and came out in full support of Kochhar.
Chanda Kochhar was part of the credit committee that sanctioned the loan. Venugopal Dhoot, promoter of Videocon Industries, was a partner in NuPower Renewables.
The first whistle-blower Arvind Gupta, a shareholder of the bank, had alleged a 'quid pro quo' in ICICI Bank's Rs 3,250 crore and another Rs 660 crore loans given to Venugopal Dhoot-owned Videocon Industries. Gupta made serious allegations that when the loans were sanctioned, 10% of the amount -- Rs 325 crore and Rs 66 crore -- flowed into NuPower Renewables.
But MK Sharma, chairman of ICICI Bank, preferred to give a clean chit to Kochhar.
While announcing the bank's quarterly results, Kochhar said that she had nothing more to add and that the board has made its stand clear on the issue.
Chanda Kochhar sits on seven committees of the bank, barring two committees that deal with audit and remuneration.
UNDER SCANNER
- The bank said that it was acting on a new whistle-blower’s complaint that flagged off concerns on Kochhar
- Probe would cover all connected matters in the course of the investigation to bring the matter to a final close
- The move by the bank follows a recent notice by Sebi on Kochhar on dealings of the bank with Videocon Group and Nupower
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