The ICICI Bank saga is becoming murkier day by day and showing both its own corporate governance as well as governance rules in general in poor light. The board today denied a media report (which was picked up by other media and social media) that its Managing Director (MD) and Chief Executive (CEO) Chanda Kochhar was asked to go on indefinite leave. According to the Bank Board, Ms Kochhar is on planned annual leave.
The Board has also denied that it has appointed any search committee to find her successor. However, it is interesting that the Board finally got around to order some kind of investigation into charges against Ms Kochhar only when she was supposed to go on planned leave - this seems to indicate that the Board is a mere puppet rather than a group of independent directors deciding what is in the best interest of the lender.
In a regulatory filing, the Bank said, "The ICICI Bank Board denies having asked Ms. Chanda Kochhar to go on leave. She is on her annual leave, which was planned in advance. Further, the Board denies that it has appointed any search committee to find her successor."
As regard the report about Ms Kochhar being asked to go on leave,
LiveMint, the paper that reported it, claimed to have obtained the information from someone "with direct knowledge of the Board's decision".
The source is quoted as saying, "ICICI Bank CEO Chanda Kochhar has been asked to proceed on indefinite leave from the company she has helmed for almost a decade until an independent enquiry announced by the lender's board to probe alleged cases of impropriety is concluded."
"A new whistleblower complaint came 15-20 days back. It came to our notice as well. The bank's board and top management first met and then the independent directors decided to meet separately. So the independent directors met on 29 May 2018. The charges made against the bank and its CEO are quite harsh and the independent directors thought that such allegations cannot be dealt with internally," the person told the newspaper on condition of anonymity.
These issues have not been touched in the ICICI Board's denial and regulatory filing. But the developments have caused much outrage about how the Bank is being treated with soft gloves and, although a listed entity, is not being compelled to put the interests of the bank before that of an individual. The fact that there is a second whistle blower is also not denied in the regulatory filing. It is time that the exchanges and the market regulator demand that ICICI Bank issue a comprehensive disclosure to investors with regard to the 'second whistleblower" and confirm whether its decisions to conduct an investigation has anything to do with it.
Earlier this week, market regulator Securities and Exchange Board of India (SEBI) issued a notice to ICICI Bank and Ms Kochhar in the Videocon case. SEBI is seeking responses from the lender and its MD and CEO Kochhar on alleged non-compliance of the "erstwhile 'Listing Agreement' and the 'Listing Obligations and Disclosure Requirements) Regulations, 2015'".
In a regulatory filing, ICICI Bank had stated, "The notice has been issued based on information furnished by the bank or its MD and CEO to diverse queries made by SEBI concerning dealings between the bank and Videocon Group and certain dealings allegedly between Videocon Group and Nupower, an entity in which Deepak Kochhar spouse of MD and CEO has economic interests."
The SEBI notice comes more than a month after nepotism and conflict of interest allegations were levelled against Ms Kochhar. It has been alleged that Ms Kochhar had wrongfully granted a loan to Videocon Group and that her husband's company -- NuPower Renewables -- received a loan from the Videocon Group's Chairman Venugopal Dhoot on a quid pro quo basis.
In 2012, a consortium of 20 banks and financial institutions sanctioned credit facilities to the Videocon Group for a debt consolidation programme and for its oil and gas capital expenditure programme aggregating to around Rs40,000 crore.
