Videocon loan case: ICICI Bank defends ex-CEO Chanda Kochhar before Sebi

Under the code of conduct, Chanda Kochhar didn't need to disclose third parties' investments in husband's firm, says bank

Denying allegations of disclosure-related violations in the ICICI Bank-Videocon case, the private sector lender told the Securities and Exchange Board of India (Sebi) that its code of conduct policy did not mandate disclosure of investments or transactions concerning firms that are owned by a bank employee's spouse. 

The bank's representatives made the statement during the personal hearing called by the market regulator on October 16, regulatory sources said.

A regulatory source said ICICI Bank refuted all charges. The bank claimed that all information that had to be disclosed by former managing director (MD) and chief executive officer (CEO) Chanda Kochhar was taken on record and disclosures were made to the stock exchanges, he added. 

“The bank's code of conduct does not require disclosure of investments made by third parties in a company owned by the spouse of a bank executive. Therefore, there was no requirement of disclosure on the part of the former MD and the bank,” said a source. 

An email sent to ICICI Bank did not elicit any response. The personal hearing was part of Sebi's ongoing adjudication proceedings in connection with the alleged violation of disclosure norms by the Videocon group and NuPower Renewables, a firm owned by Kochhar's husband, Deepak Kochhar. 

It has been alleged that Videocon group promoter Venugopal Dhoot provided some portion of the loan to NuPower Renewables six months after ICICI Bank sanctioned a Rs 32.5-billion loan to the firm in 2012.

Dhoot had subsequently transferred the proprietorship of his investment firm to a trust owned by Deepak Kochhar for Rs 900,000.

The alleged financial transaction between NuPower and Videocon is yet to be proved. This is part of an alleged criminal conspiracy that has been looked into by the Central Bureau of Investigation and a bank-appointed panel under former Supreme Court judge B N Srikrishna.  Sebi's disclosure norms mandate all listed firms to have a code of conduct, which all employees including directors and key managerial personnel are supposed to follow. Other than compliance, the rules cover conflict of interest and ethics-related matter.

According to the bank's code of conduct, a director or key managerial personnel should not knowingly withhold information that raises ethical questions and bring such issues to the attention of senior management or ensure reporting according to the applicable whistle-blower policy.

On conflict of interest, the policy states that executive officers and directors must disclose to the group compliance officer any material transaction or relationship that reasonably could be expected to give rise to such a conflict. The group compliance officer shall then notify the board governance and remuneration committee.

The code of conduct violation is Sebi's main allegation in the show cause notice against Chanda Kochhar, while in the case of ICICI Bank, Sebi is investigating whether it did due disclosures to the stock exchanges.

Sources said after Kochhar's resignation, the former MD and ICICI Bank were no longer related and were responding to legal matters independently.

Kochhar resigned from her position last month, about six months after the allegations were leveled against her. She had been on an indefinite leave since June, soon after the board was forced to appoint an external probe under Justice Srikrishna to look into the matter. 

Chanda Kochhar has sought time for the personal hearing from Sebi. The regulator has scheduled November 19 as the date for this hearing.

 

What we know

February 2018: CBI launches a preliminary enquiry into the ICICI Bank-Videocon loan matter
 

March: ICICI Bank board backs CEO Chanda Kochhar
 

April: Sebi seeks explanation over conflict of interest
 

May: Markets regulator issues show-cause notices to ICICI Bank, Kochhar

• Bank’s board orders an independent inquiry under Justice B N Srikrishna

June: Kochhar goes on indefinite leave;

• Bank appoints Sandeep Bakhshi whole-time director and COO

July: ICICI Bank reports first-ever loss since listing
 

September: Shareholders voice discontent over Kochhar saga at AGM
 

October: Kochhar resigns from her position

• Bank appears before Sebi for a personal hearing