Chanda Kochhar, former chief of ICICI Bank, is planning to take the legal option to challenge her ouster from the bank and retrieval of bonuses as well as perks after a panel indicted her in a loan scam involving her husband Deepak Kochhar's firm and Videocon Group.
Kochhar, who was the former managing director (MD) and chief executive officer (CEO) of ICICI Bank, reportedly shot a legal letter to the private lender objecting to the way her resignation was treated as a termination. She also refused to return the money she got as bonuses and stock options between April 2009 and March 2018, as per the alleged directions by the bank, reported Business Standard quoting two persons in the know of the matter.
The letter, which is said to be hard-hitting and aggressive, alleged that none of the credit decisions at ICICI Bank was unilateral and followed committee-based collective decision-making, said the report.
Provisions for clawback
According to 2018 compensation policy available on ICICI Bank website, it has provisions for a clawback.
'Employees will be required to sign clawback agreements for variable pay. In a clawback arrangement, the employee will agree to return, in case asked for, the previously paid variable pay to the bank in the event of an inquiry determining gross negligence or integrity breach, taking into account relevant regulatory stipulations,' it said.
In January this year, the Justice BN Srikrishna panel submitted its report to the Bank's board which indicted Kochhar and said the former CEO 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 panel concluded that Kochhar's lack of diligence with respect to annual disclosures as required by the Bank in terms of its internal policies implied that the lender’s processes were rendered ineffective by her approach to such disclosures and avoidance of conflict.
Following the Justice BN Srikrishna panel report, ICICI Bank said that it would treat her resignation as 'termination for cause' and would stop payment of unpaid benefits including unpaid bonus or increments, unvested and vested and unexercised stock options, and medical benefits.
Chanda had to return over Rs 9 crore performance bonus received as the bank's executive head since 2009, reported PTI quoting sources.
Besides, she would also have to forgo her unexercised stocks options, the report said.
As per the various annual reports of the bank, Kochhar was granted 94 lakh shares but it could not be verified how much stock options she had exercised.
If Employee Stock Ownership Plan (ESOP) granted to Kochhar is taken into account, the total amount comes to about Rs 340 crore at the present market value.
Of the 94 lakh shares, the former ICICI Bank CEO exercised 36.8 lakh shares worth Rs 134 crore (as of 30 January 2019 closing). Over 57 lakh shares granted by the bank over the years have not been exercised and hence stands revoked, said a report in The Indian Express.
The report claimed that the value of those shares amounted at Rs 221 crore. While Kochhar currently holds 33.3 lakh shares, she disposed of 3.5 lakh shares since May 2015 as per the data available on the Bombay Stock Exchange.
Case of conflict of interest
There were allegations of involvement of Kochhar and her family members in a loan provided to Videocon Group on a quid pro quo basis.
It is alleged that during the tenure of Kochhar, six loans worth Rs 1,875 crore were cleared for the Videocon Group and its associated companies. In two of these cases, she herself was on the sanctioning committees.
It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Kochhar's husband, Deepak.
The board of ICICI Bank had repeatedly given a clean chit to Kochhar in the past and refuted issues of conflict of interest. On 28 March 2018, the bank had said, “The board has come to the conclusion that there is no question of any quid pro quo/nepotism/ conflict of interest as is being alleged in various rumours. The board has full confidence and reposes full faith in the Bank’s MD &a CEO, Ms. Chanda Kochhar.”
The allegation of conflict of interest was levelled by whistle-blower Arvind Gupta.
Shriram Subramanian, founder and managing director of proxy advisor InGovern Research Services, said earlier to Rediff.com that current case will be closely watched for the precedent it sets. "If she contests it, then these people will have to fight it in court," he said.
— With PTI inptus
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Updated Date: May 20, 2019 12:26:01 IST