The fall of Chanda Kochhar, the iconic banking CEO and a poster woman for Indian industry, holds a cautionary tale for the entire business community, writes the BBC’s business correspondent Sameer Hashmi.
India’s third-largest lender, ICICI Bank, on Wednesday found the former chief executive guilty of violating internal bank policies and professional misconduct.
It was the culmination of an investigation set up by the bank to look into allegations of conflict of interest. It concluded that she had failed to make mandatory disclosures and her actions were not in line with the bank’s internal processes.
The bank also announced it planned to “claw back” all bonuses paid to Ms Kochhar between April 2009 and March 2018, an amount estimated to run into millions of dollars.
Ms Kochhar had risen through the ranks of ICICI to become its chief executive in 2009.
But she went on indefinite leave in June 2018, following which she announced her retirement in October 2018 even as the investigation against her was still continuing.
‘The face of a movement’
Ms Kochhar was one of India’s most celebrated bankers and arguably the most prominent female chief executive in the country.
For nearly a decade, various surveys consistently called her one of the world’s most powerful and influential female CEOs. For many Indian women, especially those working in the corporate sector, Ms Kochhar was a role model.
“She was the face of a movement that encouraged women entrepreneurs. Her downfall has done immeasurable harm to Indian chief executives, especially women business leaders,” Gurcharan Das, author and former chief executive of Procter & Gamble India, told the BBC.
Ms Kochhar began her career as a trainee at ICICI in 1984 after getting her MBA. At the time, ICICI was a financial institution that helped companies with project financing. It got a banking licence in 1994, following the liberalisation of India’s economy.
Ms Kochhar’s ascent mirrored ICICI’s journey from a small financial institution to one of India’s largest technology-driven financial service behemoths.
Under the tutelage of KV Kamath – the larger-than-life boss who headed the bank through much of the 1990s and 2000s – Ms Kochhar was given charge of several significant projects which saw ICICI set itself apart in a market dominated by public-owned banks.
In 2009, at the age of 48, she beat several other strong candidates to succeed Mr Kamath as chief executive.
Unlike her predecessors, who followed a more inclusive leadership approach, Ms Kochhar ran a tight ship with complete control and authority.
She was credited with navigating the bank out of troubled waters following the 2008 global recession.
Ms Kochhar was also renowned for her attention to detail – not only when it came to running the company but also when making public appearances or being interviewed.
She invested in a very strong PR machinery that ensured her public profile was meticulous. When I interviewed Ms Kochhar at her office in 2012, her communications team had a number of requests and queries ranging from the type of questions that would be asked to camera angles and even the size of the plant in the background.
Her love for saris and diamonds was well known. Her former colleagues say she was very particular about picking the right sari to match the mood and tone of an occasion. She even wore them while attending international conferences like the World Economic Forum in Davos – making it a style statement.
The fall from grace
Ironically perhaps, it was her lack of attention to disclosing allegedly critical information about her husband’s business dealings with a client of her bank that led to her downfall.
Ms Kochhar’s problems began in October 2016 when a whistleblower raised allegations of conflict of interest against her.
Initially the issue did not attract much media attention, but in March 2018 the story began to gain traction in the Indian press.
The scandal centres around a $456m (£347m) loan issued by ICICI bank to consumer electronics company Videocon Industries.
It had been alleged that Ms Kochhar sanctioned loans to Videocon Industries, violating the bank’s lending policies, in exchange for an investment by its owner Venugopal Dhoot in a business headed by Ms Kochhar’s husband.
Ms Kochhar, her husband and Mr Dhoot have denied the claims.
Soon after the allegations surfaced in April, Mr Kochhar said they were all “false”.
Speaking to India Today TV, he said, “Where is the conflict of interest? ICICI Bank will have relationship with all top corporates in India. If I can’t touch any corporate who deals with ICICI, is it fair to me? Can I function like this? I am a Bajaj MBA and a Harvard alumnus. I am an educated professional. Should I sit at home just because my wife is the CEO of ICICI?”
Mr Dhoot also denied any wrongdoing, insisting in an interview with the PTI news agency that the loan to his company was given on merit. He also said he knew all 12 members of the panel that approved it, not just Ms Kochhar.
Initially, ICICI’s board dismissed all the allegations against Ms Kochhar.
But continuous media glare and questions from investors forced the bank to set up an inquiry to investigate if Ms Kochhar had violated the bank’s rules with regards to conflict of interest and internal lending.
Even then Ms Kochhar did not step down, choosing instead to go on indefinite leave in June 2018. She resigned four months later.
But after the investigative committee – headed by a former Supreme Court judge – submitted its report, the bank decided to treat her resignation as termination. The report did not, however, investigate whether Videocon invested in her husband’s company in exchange for loans.
Speaking soon after that, Ms Kochhar issued a statement talking about her “disappointment” with the decision.
‘I am utterly disappointed, hurt and shocked by the decision. I have not been given a copy of the report. I reiterate that none of the credit decisions at the bank are unilateral. ICICI is an institution with established robust processes and systems which involve committee based collective decision making with several professionals of high calibre participating in the decision making,” it read.
The controversy has also raised questions about the credibility of the board and its failure to investigate the matter when it was first raised.
Shiriram Subramaniun, who heads InGovern, a corporate governance advisory firm, called the episode a lesson for company boards across the country.
“Companies need to recognise that their primary duty is toward the shareholders and not star chief executives,” he told the BBC.
But Ms Kochhar’s troubles didn’t stop there. Last week, the country’s federal investigating agency, the CBI, filed a case of criminal conspiracy and fraud against her and her husband Deepak Kochhar.
They are looking closely into Ms Kochhar’s role in the ICICI decision to sanction the loan to Videocon. In its preliminary complaint report, the organisation accused her of receiving “illegal gratification through her husband” to sanction the money.
It also accuses her of cheating, dishonesty and “abusing her official position” by sanctioning the loan to Videocon. It has also filed a case against Mr Dhoot and is investigating the roles of senior ICICI bank executives who were part of the bank committee that sanctioned the loans.
The bank told the BBC that they were not willing to comment about the investigation at this stage.