A report by The Indian Express has alleged impropriety and possible conflict of interest involving a quid pro quo between ICICI Bank MD and CEO Chanda Kochhar’s husband Deepak Kochhar, Videocon group chairman Venugopal Dhoot and the ICICI Bank. According to the report, Videocon chairman Dhoot started a joint company with ICICI Bank MD and CEO Chanda Kochhar’s husband Deepak Kochhar and two of her other relatives.
Dhoot then gave a Rs 64-crore (USD 10 million) loan to the joint company through a fully owned entity and then transferred the ownership of the lending entity to a trust headed by Deepak Kochhar. This happened six months after Videocon was granted a loan of Rs 3,250 crore (USD 500 million) by ICICI Bank.
The report claims that a staggering Rs 2,810 crore (USD 425 million) out of the Rs 3,250 crore (USD 500 million) loan has remained unpaid. The account of Videocon was declared a non performing asset (NPA) in 2017. The report further claims that this Dhoot-Kochhar-ICICI web of transactions is under scanner of investigative agencies.
On Wednesday evening, ICICI Bank issued a press release denying any impropriety on its part. “…there is no question of any quid pro quo/nepotism/conflict of interest as is being alleged in various rumours,” the bank said in the statement, adding that the Board “reposes full faith” in Chanda Kochhar. It further said that “malicious and unfounded rumours” were being spread to “malign the Bank.” According to The Indian Express, the statement by ICICI Bank came a day after it sent its questionnaire to the bank seeking response to its findings. The bank’s statement, however, did not address the specific question on conflict of interest, the paper claimed.
Here is the sequence of transactions as detailed by The Indian Express:
* In December 2008, Dhoot and Deepak Kochhar set up NuPower Renewables Pvt Ltd (NRPL). While Dhoot held 50 per cent stake in the company with his family members and associates, the remaining 50 per cent was held by Deepak Kochhar and Pacific Capital, co-owned by Deepak Kochhar’s father and Chanda Kochhar’s brother’s wife.
* In January 2009, Dhoot stepped down as director of NuPower and subsequently transferred his 24,999 shares in the company to Kochhar for Rs 2.5 lakh (USD 0.25 million)
* In March 2010, NuPower received a loan of Rs 64 crore (USD 10 million) from a company called Supreme Energy Private Limited. According to The Indian Express, Dhoot held a 99.9 per cent stake in Supreme Energy Private Limited.
* By the end of March 2010, Supreme Energy became a 94.99 per cent shareholder in NuPower after a chain of transfer of shares between Dhoot and Kochhar, and then between Pacific Capital and Supreme Energy.
* In November 2010, Dhoot transferred his entire holding in Supreme Energy to his associate Mahesh Chandra Punglia, the report states.
* Between September 29, 2012 and April 29, 2013, Punglia transferred his holding in Supreme Energy to Pinnacle Energy. Deepak Kochhar was the managing trustee in Pinnacle Energy. The total transaction value of transfer of shares from Punglia to Pinnacle Energy trust stood at Rs 9 lakh. (USD 0.9 million)
According to The Indian Express, ICICI Bank did not address these transactions in its response. However, it did respond to a query on the issue of loan to Videocon group in its response to the paper’s e-mailed questionnaire. “In 2012, a consortium of over 20 banks and FIs where State Bank of India was the facility agent (Lead) sanctioned facilities to the Videocon group (Videocon Industries Ltd. and 12 of its subsidiaries/ associates as co-obligors) for a debt consolidation programme and for the group’s oil and gas capital expenditure programme aggregating approximately Rs. 40,000 crore…ICICI Bank sanctioned its share of facilities aggregating approximately Rs 3250 crore which was less than 10% of the total consortium facility in April 2012. The current outstanding against this loan is Rs 2810 crore and total current exposure to Videocon group is Rs 2849 crore…(USD 428 million)The Videocon group account has been classified as an NPA during 2017,” ICICI Bank said.
Videocon chairman Venugopal Dhoot has also responded to the allegations of conflict of interest and denied it. “On January 15, 2009, I resigned as a director of NuPower Renewables and Supreme Energy Private Ltd and sold at par the 24,996 shares of NuPower and 9,990 shares of Supreme Energy held by me, thereby relinquishing my right, title and interests in the said shares, giving up control and management of Supreme Energy and completely disassociating myself from both the Companies all on the same day, as I got too busy with my other larger business like oil & gas, telecommunication, etc.,” Videocon chairman Venugopal Dhoot said.
NuPower Renewables stated that it has no connection with ICICI Bank’s lending to companies owned by Mr. Venugopal Dhoot and said that the facts stated by the paper were incorrect.