ICICI Bank may face probe over non-disclosures in NuPower deal

Probe agencies are examining if ICICI Bank should have declared three companies — Pacific Capital Services; Supreme Energy Private Ltd (SEPL) and Pinnacle Energy — as related parties. These companies were involved in transfers of shareholdings in NuPower Renewables Private Limited (NRPL), a company owned by Deepak Kochhar, husband of Chanda Kochhar, the bank’s CEO.

Probe agencies are exploring the possibility that such non-declaration could violate provisions of the Companies Act, 2013. Section 184 of the Act stipulates that every director of a company (both public and private) shall disclose their interest in third parties. In December 2008, Videocon Group chairman Venugopal Dhoot and Deepak Kochhar had set up NuPower Renewables Private Ltd (NRPL). While Dhoot held a 50% stake in the company, the remainder was held by Deepak Kochhar and Pacific Capital, a company owned by his father and Chanda Kochhar’s brother’s wife Neelam Advani.

The second company, SEPL, was owned by Dhoot. SEPL became a 94.99% shareholder in NRPL by March 2010 following a transfer of shares from Dhoot to Kochhar and subsequently from Kochhar and his relatives-owned Pacific Capital to SEPL. Kochhar held the remaining stake (close to 5%) in NRPL. In November 2010, Dhoot transferred his entire holding in SEPL to his associate Mahesh Chandra Punglia.

Punglia has been quizzed twice by the Central Bureau of Investigation (CBI) which has initiated a preliminary enquiry (PE) in the case. Punglia, a former employee of Videocon, used to offer consultancy services to Videocon. Punglia went on to become a director in Deepak Kochhar’s NRPL. After Dhoot transferred his holding to Punglia, the latter transferred the same to Pinnacle Energy, a trust where Deepak Kochhar was the managing trustee.

The Reserve Bank of India (RBI), which had probed allegations of quid pro quo against ICICI Bank in 2016, had also given a finding pertaining to these companies. The RBI report, first reported by ETon April 12 and 17, recorded that ICICI had declared Deepak Kochhar’s NRPL as a “related party” from October 2015. However, prior to October 2015, “only Deepak Kochhar, CEO of NRPL, was being declared as a key relative of MD and CEO (Chanda Kochhar)”.

Further, RBI also recorded that the “bank had not declared Pacific Capital Services Private Limited, SEPL and Pinnacle Energy as related parties”. RBI’s probe report also stated that NRPL, Pacific Capital, SEPL and Pinnacle Energy “have” no banking relations with ICICI Bank. However, NRPL had banking relations with PNB, Central Bank of India and Canara Bank. Responding to queries, a spokesperson for ICICI said: “The bank is regulated by various regulatory bodies and authorities including RBI. In this context, the bank receives various queries from time to time which are appropriately responded to. The communications between the bank and the regulators are privileged and confidential.”

Multiple probe agencies, including the I-T Department, Serious Fraud Investigation Office (SFIO), and CBI are probing allegations of nepotism and corruption in a Rs 3,250-crore loan extended by ICICI Bank to Dhootfounded Videocon group in 2012. ICICI Bank was part of a consortium that lent Rs 40,000 crore to the Videocon group. The bank’s board has twice dismissed accusations of nepotism, corruption and quid pro quo in the sanctioning of loans to Videocon. ICICI Bank chairman MK Sharma said Chanda Kochhar had made all the necessary disclosures. The bank maintained that it was only one of a consortium of 20 lenders, led by SBI, that had granted about Rs 40,000 crore in loans to Videocon.

It said the amount lent by ICICI was less than 10% of the total amount.