In 2016, Arvind Gupta, a shareholder of both the Videocon group and ICICI Bank, sent a detailed letter to authorities, including to the Prime Minister’s Office, narrating a suspicious sequence of financial transactions between the ICICI Bank, the Kochhars and Videocon’s Venugopal Dhoot. The letter, dated 15 March, 2016, sought investigation into alleged illicit banking and commercial transactions involving Dhoot and the Kochhars. The letter alleged that for wrongful personal gains both parties acted in a non-transparent manner with respect to certain financial transactions. The full text of the letter is embedded below:
Firstpost spoke to Gupta on Wednesday, who said that in 2017, a year after he shot off his letter, he mailed a reminder to the relevant authorities, but that he has not received any response so far.
On Thursday, The Indian Express reported a series of suspicious transactions involving Videocon group promoter Venugopal Dhoot and an equal joint venture -- NuPower Renewables Pvt Ltd (NRPL) -- floated with ICICI Bank MD Chanda Kochhar’s husband, Deepak Kochhar, and linked those transactions to a 2012 loan worth Rs 3250 crore from ICICI Bank to the Videocon group.
Dhoot reportedly handed over full ownership of the JV to Deepak Kochhar for a small investment some six months after the sanction of the abovementioned loan. A major chunk of the loan given to the Videocon group has been labelled as non-performing assets (NPAs), said the report. The Dhoot-Kochhar-ICICI web of transactions, which points to a corporate-banking nexus, is being examined by investigative agencies for alleged quid-pro-quo deals, the report added.
Firstpost couldn’t independently verify any evidence that points to a quid-pro-quo deal between the Videocon group and the Kochhars.
What are the facts of the case? As Gupta’s letter states, NuPower was set up by Dhoot and the Kochhars as an equal JV in 2008. Dhoot-owned Supreme Energy Pvt Ltd pumped Rs 64 crore into NuPower in 2010, in the form of fully convertible debentures. Between 2008 and 2012, through multiple transactions Dhoot, who originally owned half of NuPower, transferred a majority stake to Kochhar. These transactions involved Supreme Energy, Pinnacle Energy, a trust where Deepak Kochhar was the managing trustee, and Dhoot’s associate Mahesh Chandra Punglia. Parallelly, a Mauritius-based firm, DH Renewables, also invested in NuPower. That’s one side of the story.
The other side is about the ICICI Bank’s loan transaction to the Videocon group. This happened in 2012, when the bank joined a consortium led by the State Bank of India (SBI) that lent Rs 40,000 crore to the Videocon group (to Videocon Industries Ltd and 12 subsidiaries/ associates as co-obligors). ICICI Bank’s exposure, in that transaction, was Rs 3250 crore. Later, in 2017, ICICI classified this as an NPA and the current outstanding is Rs 2810 crore. Did Kochhar personally play a role in disbursing the Rs 3250 crore loan to the Videocon group? In a statement on Wednesday evening, the bank’s board defended Kochhar and denied allegations of a quid-pro-quo deal.
This is what the ICICI Bank said in the statement: “No individual employee, whatever may be his or her position, has the ability to influence the credit decision at the Bank.”
The lender cited eight points to defend its case:
- In 2012, a consortium of over 20 banks and financial institutions 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’s current exposure to the Videocon group is part of this syndicated consortium arrangement.
- ICICI Bank was not the lead bank for this consortium and the Bank only sanctioned its share of facilities aggregating approximately Rs 3250 crore which was less than 10 percent of the total consortium facility in April 2012.
- After the preparation of the Information Memorandum and the initial due diligence for the financing programme by the lead arrangers and after the sanction of the facilities by the lead bank, the Credit Committee of ICICI Bank in 2012 sanctioned its share of facilities in the syndicated arrangement to the Videocon group.
- This Committee was chaired by the then Chairman of ICICI Bank and it included independent and working Directors of the Bank. It is important to note that Ms. Chanda Kochhar was not the Chairperson of this Committee.
- The Terms and Conditions offered for these loans are similar to those offered by the other banks in the consortium, ruling out the possibility of any special benefit to the borrower by ICICI Bank.
- It is important to note here that all banks including ICICI Bank disbursed the Rupee Term Loan into the common escrow pool account being maintained for this purpose by the lead bank.
- ICICI Bank’s share of the banking sector’s exposure to the Videocon group was less than 10 percent while around 90 percent of the loans were sanctioned by other banks and financial institutions.
ICICI bank’s explanation seems convincing given that the exposure to Videocon was via a consortium of lenders and control of the consortium was not with ICICI. Also, the fact that Videocon received loans from a host of other banks too that had eventually become NPAs indicates that this wasn’t a bank-specific deal that Chanda Kochhar could have influenced as the bank head.
How did Deepak Kochhar’s shareholding increase substantially in NuPower? We don’t have the full details of the case but a back of the envelop calculation on the basis of available numbers shows that NuPower was equally owned by Videocon and Kochhar, with each holding about 75000 shares each. This means the initial share base and investment was very small. Thereafter, when Kochhar invested Rs 1.89 crore, he received 18.9 lakh shares, taking his total to 19.72 lakh shares, whereas Videocon's remained the same. In percentage terms, Kochhar thus controlled 96 percent of the JV. Subsequently, Videocon's shareholding fell to less than three percent. This is a possible scenario.
In its report, The Indian Express cited responses from NuPower and Videocon’s Dhoot, wherein both parties have denied any wrongdoing.
Are the two – Dhoot’s transactions in NuPower that ultimately handed over ownership to Kochhar and ICICI Bank’s Rs 3250 crore loan to the Videocon group – connected? It may or may not be. Only a deeper probe will reveal whether ICICI Bank-Videocon-Kochhars were party to a genuine business deal or whether this is a case of a quid-pro-quo deal, pointing to the corporate-banker nexus.
(Kishor Kadam contributed to this story)
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Updated Date: Mar 29, 2018 20:10:58 IST