The Justice BN Srikrishna Committee that probed allegations against Chanda Kochhar, the former managind director (MD) and chief executive (CEO) of ICICI Bank, has found that she violated the bank's code of conduct in dealing with conflict of interest and fiduciary duties in the case of loans to Videocon that had routed a part of the money to a company owned by her husband Deepak.
The report also concluded Ms Kochhar's lack of diligence with respect to annual disclosures as required by the bank in terms of its internal policies, the ICICI Bank code of conduct and applicable Indian laws, rules and regulations on her interest (direct or indirect) toward avoidance of conflict of interest.
The Bank said in a release that following the receipt of the enquiry report and its due consideration and the conclusions thereat, after due deliberations, the Board of Directors decided to treat the 'separation' of Ms Kochhar from the Bank as a 'termination for cause' under the Bank's internal policies, schemes and the code of conduct with all attendant consequences.
This included revocation of all her existing and future entitlements such as any unpaid amount, unpaid bonuses or increments, unvested and vested and unexercised stock options and medical benefits. The Board's decision will also require "clawback" of all bonuses paid from April, 2009 until March, 2018 and to take such further actions as may be warranted in the matter.
The bank also noted that there were no implications of the Enquiry Report on its published financial statements (Indian or US General Accepted Accounting Principles) for the relevant periods.
Reacting on the Justice Srikrishna Committee report, Ms Kochhar said none of the credit decisions at the bank were unilateral. "I am utterly disappointed, hurt and shocked by the decision. I have not been given a copy of the report. I reiterate that none of the credit decisions at the bank are unilateral. ICICI is an institution with established robust processes and systems, which involve committee-based collective decision-making with several professionals of high calibre participating in the decision-making. Hence the organization design and structure obviate the possibility of conflict of interest," she said in a statement.
Quoting the ICICI Bank, a report from Emkay Global Financial Services Ltd says the management had clarified that the first information report (FIR) filed by the Central Bureau of Investigation (CBI) in Videocon-Ms Kochhar quid-pro-quo case does not specifically alleges any wrong doing by loan sanctioning committee members including current MD & CEO Mr Sandeep Bakhshi and management will fully cooperate with the investigation.
"In our view, although the internal probe report and ongoing investigations relating to past events may remain an overhang in the near term, they are unlikely to derail the bank's long-term re-rating story underpinned by strong re-retailisation, and improving asset quality and return ratios. We maintain our Buy rating on the stock, with a revised target price of Rs450. We would be watchful of any further developments in the ongoing external investigation, which could be long drawn affair," the brokerage said in its report.
Last week, the CBI lodged an FIR against 57-year-old Ms Kochhar, Deepak and Videocon's chief VN Dhoot besides four companies in connection with the controversial loan. As part of a quid pro quo, Mr Dhoot allegedly invested Rs64 crore in NuPower Renewables Pvt Ltd run by Mr Kochhar. Ms Kochhar had stepped down from the post of CEO and MD in October last year after media expose of the loan saga. Her tenure in the Bank was to end this March.