BackChanda Kochhar sacked after probe panel indictment
Srikrishna panel report says the ex-CEO breached bank’s code of conductICICI Bank said its board decided to treat Kochhar’s separation from the lender as a “termination for cause”
PremiumMumbai: A little more than a year ago, Chanda Kochhar couldn’t have been faulted for feeling on top of the world, having been named as one of the world’s most powerful women by Forbes.
On Wednesday, Kochhar, 57, was sacked as chief executive of ICICI Bank, India’s second-largest private lender, after a panel indicted her on several counts. Perhaps, the fall was the consequence of using that power unwisely.
The ICICI Bank board terminated her services following a board meeting, where it discussed the Srikrishna panel report that found the former banker to have breached the bank’s code of conduct.
“Chanda Kochhar was 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 bank said in an exchange filing. It also faulted her for lack of diligence with respect to annual disclosures as required by the bank.
The Srikrishna panel concluded that under Kochhar, the bank and she herself failed to make crucial disclosures relating to loans and did not follow the required recusal policies while sanctioning them to parties related to her.
The bank plans to claw back all bonuses, amounting to about ₹10 crore, paid between April 2009 and March 2018.
The findings of the report will add to Kochhar’s worries after the CBI lodged an FIR against her, husband Deepak Kochhar, Videocon group chairman Venugopal Dhoot and six other entities last week for criminal conspiracy and cheating.
CBI had registered a preliminary enquiry against Deepak Kochhar and Dhoot in March 2018 to investigate irregularities in the ₹40,000 crore loan made by a consortium of lenders to Videocon group.
On 1 June, Mint was the first to report that Kochhar had been asked to proceed on indefinite leave until an independent enquiry to probe alleged cases of impropriety could be concluded. Soon after this, the Srikrishna panel was appointed to look into the allegations and then, in October, Kochhar came out of the enforced indefinite leave to quit the lender.
The Srikrishna panel investigated claims made in a whistleblower report, which alleged that Kochhar had compromised the bank’s credit disbursal policies, favouring certain clients related to her husband and violating basic banking code of conduct, without caring about adherence to corporate governance standards.
The Srikrishna panel report is based on Kochhar’s role during the period from 1 April 2009 to 31 March 2018. The panel, which was assisted by an undisclosed law firm and a forensic and investigative services firm, said Kochhar had snubbed the rules and regulations in her interests (direct or indirect) towards avoidance of conflict of interest.
Kochhar did this despite being aware that the bank’s processes were dependent solely on the directors discharging their fiduciary duty and it was important to recuse themselves for avoiding conflict, said the report.
Kochhar said in a statement on Wednesday that ICICI Bank’s decision has caused her “immense hurt and pain".
“I am utterly disappointed, hurt and shocked by the decision," she said. “I reiterate that none of the credit decisions at the bank are unilateral. I have never shied away from taking tough decisions whenever required to be taken in the best interest of the organization. I continue to have faith and belief in my conduct as a professional and I am certain that truth will ultimately prevail."
On Wednesday, the bank said its board had decided to treat the separation of Kochhar from the bank as a “Termination for Cause", meaning such a termination would entail consequences including revocation of all her existing and future entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested and unexercised stock options, and medical benefits, said the bank’s board.
The bank said it might take further actions, if warranted.
However, the bank said the panel’s findings would have no implication on its published financial statements.
It is to be seen how the CBI FIR and the Srikrishna panel report affect Kochhar’s directorships in other firms and the ongoing probe by the US SEC, since the charges against her are serious in nature, raising questions about the way the bank functioned during her decade-long tenure.
Kochhar has been in the eye of a storm ever since the Serious Fraud Investigation Office summoned her in March 2018 in connection with loans extended to fugitive Mehul Choksi’s Gitanjali Group.
Later, on 20 March, a whistleblower complained against the bank and its top management, including Kochhar, alleging a deliberate delay in recognizing impairment in 31 loan accounts between fiscal 2008 and March 2016 to save on provisioning costs and inflate profits by $1.3 billion over eight years. Mint reported this first on 25 June.
The decisive blow was delivered by allegations of granting loans to Videocon as a quid pro quo for its dealings with her husband Deepak. On 12 April, Sebi began a probe into alleged corporate governance lapses at the bank and failure to make adequate disclosures about the bank’s loan to Videocon group.
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