Chanda Kochhar’s absence echoes at ICICI Bank AGM
At the ICICI Bank AGM, shareholders seek more clarity from the board, ask why an independent probe wasn’t launched earlier
Mumbai: Irked with ICICI Bank Ltd’s handling of the controversies surrounding CEO Chanda Kochhar, shareholders on Wednesday were scathing in their remarks on governance standards during the bank’s 24th annual general meeting.
Despite the ICICI Bank board requesting shareholders to refrain from asking any question related to Kochhar who is on a leave of absence, the shareholders asked uncomfortable questions and demanded more clarifications from the bank’s directors, two people directly aware of the developments said.
Chanda Kochhar, along with a few other directors, were not present at the 24th AGM held at Vadodara, Gujarat.
“The directors told shareholders that since an independent probe under retired Supreme Court justice B.N. Srikrishna with regards to allegations against Kochhar was on, the shareholders should not expect the board to answer any question related to her,” said the first person mentioned above, requesting anonymity.
This did not satisfy shareholders. “The shareholders asked whether the board was aware of the loan facilities given to Videocon Industries Ltd and Kochhar’s husband’s connection with the promoter of Videocon Group. They asked why the board did not disclose this information to the shareholders, if they were aware of such a conflict of interest,” he added.
Displaying their dissatisfaction with the way the board dealt with the allegations of conflict of interest and quid pro quo against Kochhar, some shareholders also asked the board why it did not launch an independent inquiry before the whistleblower complaints were filed with the bank and the regulators, he added.
They also asked why the board under former chairman M.K. Sharma chose to hastily give a clean chit to Kochhar at the time of announcing the annual financial results of 2017-18, despite the CEO facing serious allegations, and the bank being under investigation by multiple authorities, including the Reserve Bank of India (RBI), the Securities and Exchange Board of India (Sebi) and Securities and Exchange Commission.
“Without even considering to initiate an independent probe, the board let her escape at the time of announcing the financial results. The shareholders asked, what took the board so long to decide to launch an independent probe, and why did it choose to hide the details of the probe by RBI in 2016, with regards to allegations against Kochhar over credit facilities given to certain corporates related to her family. They also asked why the board did not question Kochhar when loans were being given to loss-making entities,” said the second person, also requesting anonymity.
The shareholders urged the bank’s board to take immediate steps to restore corporate governance standards and provide them with clarity on the Srikrishna panel probe’s terms of reference, scope of work and timeline.
The disgruntled shareholders also asked about the functioning of the bank’s overseas subsidiaries and loans given from its foreign subsidiaries to overseas entities, especially those which belong to Indian promoters.
That’s not all. “The shareholders also asked why Kochhar was not asked to quit as the CEO. They also asked on what basis the bank had voted in her favour, while investigations by Srikrishna panel and other agencies are yet to be concluded,” the second person added.
The shareholders suggested that the board should take a decision on cleaning the bank’s balance sheet by providing for all bad loans and taking a one-time hit.
On 28 March, the bank’s board had first backed Kochhar. On 7 May, following the announcement of the annual results, it chose to stick to its earlier stance on Kochhar. On 23 May, Sebi had sent a 12-page notice to the bank and Kochhar, alleging violation of listing obligation and disclosure requirements.
And then, after considering a whistleblower complaint against Kochhar and the bank’s top management to the regulators and a board meeting on 29 May, a majority of the independent directors on the board asked Kochhar to go on an indefinite leave. On 19 June, Kochhar the board decided to initiate an independent inquiry against Kochhar. The probe under Srikrishna is yet to be concluded .
“Responding to shareholders, the board has said that the bank is cooperating with all agencies conducting probes into the bank and Kochhar,” he added.
In a separate development, law firm Panag and Babu is looking into yet another whistleblower complaint alleging that the bank had inflated profits by at least $1.3 billion over eight years, by delaying provisioning for bad loans. The complainant also said that top executives, including Kochhar and executive director Vijay Chandok, wilfully breached rules to avoid classifying the loans as bad.
In March, The Indian Express reported that Videocon promoter Venugopal Dhoot had provided a loan of Rs 64 crore to NuPower Renewables Pvt. Ltd (NRPL), a firm he had set up with Kochhar’s husband Deepak Kochhar and two relatives six months after the business group got a loan of Rs 3,250 crore as from ICICI Bank in 2012.
Dhoot had transferred proprietorship of the company to a trust owned by Deepak Kochhar for Rs 9 lakh, six months after he received the loan from ICICI Bank, the report added. The Videocon account was declared an NPA or a bad loan in 2017, according to the report.
On 23 April, the ministry of corporate affairs (MCA) had ordered an inspection of the “books and papers” of six companies linked to the ICICI Bank loan controversy, including NuPower Renewables Pvt. Ltd, Supreme Energy Pvt. Ltd, Pacific Capital Services Pvt. Ltd, Videocon Industries Ltd, NuPower Wind Farms Ltd and EchandaUrja Pvt. Ltd.
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