 Hello and welcome to NewsClick. I'm Poranjoy Guha Thakurtha and this is the first in a series of conversations that I will be having with Hemindra Hazari. He is an independent analyst of India's banking sector. He very, very closely scrutinizes this sector, especially the working of private banks and his articles are often eye-opening, controversial but there are a lot of people who don't want to publish him simply because they depend on advertising support from these large banks who he is critical of. Among other places that he writes for is Smart Karma which is a website based out of Singapore which promotes independent analysis and of course the wire portal. Thank you so much Hemindra for coming here and giving us your time. Let's start with the big story. The big story is of course the ICICI Bank, the entire Chanda Cocher episode. What is your comment on the recent statement made by Finance Minister Arun Jaitley who's currently under treatment for soft tissue cancer in the United States and he in a blog which has been published on Facebook cautioned the Central Bureau of Investigation against what he described as investigative adventurism. And I quote him, there is a fundamental difference between investigative adventurism and professional investigation. Sitting thousands of kilometers away when I read the list of potential targets in the ICICI case the thought that crossed my mind was again the same. Instead of focusing primarily on the target it is a journey to nowhere and then within parenthesis or everywhere being undertaken. Question mark. If we include the entire who's who of the banking industry with or without evidence what cause are we serving or actually hurting? It is clear that the Finance Minister of this country is concerned about the who's who of India's banking and financial sector being named in the first information report lodged by the Central Bureau of Investigation. But before I come into the names of the people mentioned in the FIR how do you react to Mr. Jaitley's comments? I think this is an unprecedented comment by a serving very senior member of the cabinet. I don't remember any such comment made by any member of government against its own investigative arm which is the Central Bureau of Investigation. I wouldn't have minded if Mr. Jaitley was an independent commentator then I think he has every right to make such a statement. But if when you're a senior member of the government and that too you were just the Finance Minister just a few days before. He is still officially the Finance Minister. Then very much so then Mr. Piyush Goyal is officiating because of his ill health. So then he is speaking as the Finance Minister of this country when he makes such a statement and I think this was an uncalled for statement because such statements if he were to truly believe it should have been said privately. Now we come to the contents of this statement. Now it's rather surprising that he suddenly wakes up and finds that the CBI is making these adventurous investigations. The question then lies is has the CBI doing it earlier as well? Because if you see the case of Bank of Maharashtra for example the Chairman, the CEO and his number two were indeed arrested by the Bombay police or the Pune police. At that time Jaitley did make some generalized comment but he never specifically voiced his dissent on this. Similarly you know from where he sits I'm sure the PNB headquarters only a few kilometers away and not thousands of kilometers away. Even when she was charged she did. You mean the ICICI Bank headquarters? No the PNB, the Punjab National Bank where the year of Modi scam happened and where the Central Bureau of Investigation determined that it was the CEO has to accept you know responsibility. For what in my view would have been a procedural lapse which would have been an administrator matter and not a criminal matter but even then the when she was dismissed subsequently from the Bank you know the Alhabad Bank you did not hear him come out and make any defense. Remind you these are government banks the government is the owner he's the finance minister but lo behold when it comes to the private sector when it comes to people of ICICI Bank or the representatives representing standard charted bank or Tata capital suddenly you find I'll come to that in a bit. Hemindra the preliminary inquiry of the CBI was registered on the 8th of December 2017 this pertains to the allegedly illegal manner in which funds were sanctioned by the ICICI Bank two companies in the videocon group headed by Mr. Venugopal Doodh which in turn was used to financially support companies controlled by Chanda Cocher's husband and other family members Mr. Deepak Cocher and others on Wednesday the 23rd of January the CBI registered a FIR alleging that the ICICI Bank had been cheated of 1,730 crores. Now Mr. Jaitley and I continue to read what he wrote in his Facebook blog says, Adventurism leads to media leaks ruins reputations and eventually invites strictures and not convictions in the process the targets are ruined because of harassment loss of reputation and financial costs it costs people their career he wrote and he added a word of advice to the CBI he says follow the advice of Arjun in the Mahabharat just concentrate on the bull's eye what he's suggesting perhaps in not so many words but the very fact that the FIR suggests that the CBI may probe the role of various big wigs Mr. Sanjoy Chatterjee Chairman and Co-CEO of the Goldman Sachs Group in India Ms. Zareen Daruwala CEO of Standard Chartered Bank Mr. Rajiv Sabarwal CEO Tata Capital Mr. Homi Khusru Khan Director in the Bank who's also an advisor to the Tata Group importantly important functionalities in the bank and group companies it's President CEO Mr. Sandeep Bakshi it's former CEO Mr. K. V. Kamath who's now the President of the new Development Bank earlier known as the BRICS Bank BRICS Development Bank BRICS being an acronym for Brazil Russia India China South Africa and of course he's the former chairman of the ICICI Bank and many people believe that Mrs. Chandakocha was groomed by him to be his successor and of course there is Mr. Enes Kannan of ICICI Prudential Life Insurance he's the CEO and so it's clear that Mr. Jaitley believes that the CBI should not have named all these individuals whose names I've just read out in the FIR what are your views I think it's very clear to everybody that he's most concerned about the reputation of these private institutions which is in the private sector he doesn't seem to be very concerned when government bankers are implicated they spend time in judicial custody and then are subsequently released without any case at that moment in time he doesn't seem to be defending their interests but when it comes to the interests of certain companies in the private sector he rises to their defense very publicly as if he's shouting from the ramparts so this is what you see in today's world is that the private sector is glorified and nobody can really touch them and anyone dares touch them the government will come to the rescue but when someone does the same thing to government entities there is no one to defend them at all my only issue here is this that he should treat both equally if he feels that there's political adventurism by the central bureau of investigation he should even voice it when they were targeting government bank officials because they've been many cases on similar grounds that Garcia government bank officials have been implicated and at that time nobody in government ever comes out to defend them Mr. Hazari the entire episode concerning Mrs. Chanda Kocher her husband Deepak Kocher companies which are controlled by him like New Power Renewable Supreme Energy which was originally a company which was partly controlled by him and partly with associates and Mr. Venukupal Dhooth who heads the videocon group this entire maze of transactions that took place was exposed by the Indian Express newspaper on the 29th of March 2018 that's about 10 months ago and these pertain to a series of these very complex transactions between 2008 and 2013 subsequently what happened was that the board of the ICICI expressed their full faith in Mrs. Chanda Kocher was then the chief executive officer and managing director she went on leave on the 18th of June and formally resigned on the 4th of October 2018 do you think the ICICI board should have expressed full faith in her and the manner it did of course not because if it had done so it should first have done an independent investigation which should have cleared her and then I can understand if the board reposes faith in her but what we have seen was that there was really no independent investigation done there was once supposedly legal entity which the media said was Cyril Amarachand Mangal Das which had and Shroff which had done an independent investigation but then after some evidence came out they subsequently withdrew that investigation the entire report so the way the private sector works and this is what I have been observing very closely in other banks is when the CEO is ever targeted the first reaction of the board when my mind you when I say the board I get emphasis on the independent directors on the board is not to do an independent investigation but it is a for their first priority is to defend the CEO instead of trying to defend the institution and that is where their priority is lie that under any cost even at the cost of the reputation of an institution as we have seen an ICICI banks case they will just leap to the defense of the CEO without doing really any major investigation as we can see in this particular matter everything unraveled very quickly then and for the entire credibility of ICICI banks board the ICICI board decided to appoint a retired judge of the Supreme Court of India Justice BN Sri Krishna under him there was a panel of experts and they are submitting a report which is independent of parallel if you like to the CBI investigation that's been going on or continues that committee is yet to submit its report do you think that the manner in which the circumstances under which this committee headed by Justice BN Sri Krishna was appointed perhaps what does it indicate to you firstly there was so much pressure brought on ICICI bank then because of media report that they were forced to do something like that if they had not been this media pressure I don't think they would have been appointed you know committee headed by a former judge to do it so it was the media pressure that compelled them to do it now having said that it is my experience that in the private sector when the CEO is targeted for doing something unethical or illegal in my view the any investigation which is managed by the company has less credibility because typically what we find is that such investigative independent agency whoever they appoint they have some linkages that we may not know with the concerned entity and therefore there's always a doubt whether it's going to be objective or not so when the CEO is a target I would you know give far more credibility to you know government regulatory agencies which do the investigation then by any investigation which has been appointed by the company in this particular case relating to Mrs. Chanda Kocher her husband Deepak Kocher and the transactions with the video con group headed by Mr. Venugopal Doot do you think these entire transactions have gone beyond the realm of propriety ethics conflicts of interest or even sweetheart deals if you like and today entered into the realm of whether the law has been violated whether provisions of the Indian penal code have been violated whether the provisions of the Prevention of Corruption Act have been violated see what I can say definitely that there's a conflict of interest now whether any illegal or whether any quid pro quo was done that is for the you know for the CBI now to determine but in my opinion which was very stark from the very beginning that there was a conflict of interest Mrs. Chanda Kocher should not have been present in the committee which then sanctioned the loan to video con when her husband was involved in a company where video con was also involved that to me is very clear you should have suppose she play I'm playing devil's advocate she said I didn't know about the business dealings of my husband well you ought to know or or my my brother-in-law who is technically not my relative and under certain provisions of the company's act you see in this case it may not have been illegal as of yet what we know but definitely it raises a question of corporate governance because corporate governance goes beyond legality it is you know doesn't have to be illegal for norms of corporate governments to be you know to have not been met and in this case and in any bank which you work and I worked in some of these very large banks you have to give a very stringent disclosure what your family's investments are what they do then the internal compliance departments checks it out and if you are found to have lied then there's a very high possibility there'll be strict censors against you and you may even lose your job so you're I have gone through that process myself so I know which bank did you work in see I have worked with a lot of the big banks like UBS society general you know HSBC so these norms are very they're very much there so you're saying internal governance mechanisms to ensure due diligent to avoid conflicts of interest were perhaps not done in this particular instance in the ICICI bank apparently so and there is more responsibility on such a senior person that they have to disclose you cannot say I do not know what my spouse is doing and you better know what's going on Mrs. Chandakoch had joined the ICICI bank in 1984 she was a management trainee she eventually rose to become its managing director chief executive officer in May 2009 she she's not only considered the the face of retail banking in India she's the so-called poster woman of Indian banking and and everything that's supposed to be good and efficient about private private sector banking and and today she is her image has been badly tarnished but is it a case of I go back to where I started is the CBI on firm ground or is it indulging in adventurism to use the words of finance minister Arun Jaitley going by the evidence that we have seen which is in the public domain regarding Chandakoch her husband the companies that were involved at Vidyakon's own interest in my opinion I think CBI is on the right foot there because mr. Dhooth and his associates transferred their ownership in supreme energy that gave a loan of 64 crores to new power which is a company controlled by mr. Deepak Kochar and his associates this doesn't paper trail falls and it went the money went to a trust which was headed by mr. Kochar for nine lakh rupees so does that sound a little very clear to me as an analyst I'm very clear that I think they had the central Bureau of Investigation has a strong case I think the whistleblower who first did this report I think did a very good job his name is mr. Arvind Gupta yes I think he says he's a shareholder and he was said he would like to like the government to inquire into foreign funding of Indian companies and Indian banks and he went on to say further to A&I that this could be just the tip of the iceberg. It could very well be but the point to your question is I think the CBI is on very sure footing here at least where Chanda Kochar's personal quid pro quo, alleged quid pro quo or conflict of interest is concerned it's footing may be less clear when it comes to the other individual's name because in the FIR that is in the public domain now there is no evidence put out that what was the quid pro quo for all these individuals so at best we can say it was a lapse of procedure which is not a criminal act. Okay my last question to you. Superintendent of Police Sudhanshu Dharmishra who is part of a cell in the central Bureau of Investigation in Delhi it's called the Banking and Securities Fraud Cell he's the person actually who signed the first information report relating to this entire Chanda Kochar episode on the 22nd of January and the very next day he was transferred to the Economic Offences Branch of the CBI in Ranchi capital of Jharkhand. Do you see something unusual in the manner in which this happened or you think after all it's the right of the government the right of the CBI to transfer any officer wherever they wish to. If it was just a random event then that possible explanation could hold but given what we've seen in the last one month or what's happening in the central Bureau of Investigation everything looks extremely murky in India's premier criminal investigation you know arm so given in those light of these developments the way so many transfers are being made that this was a very sensitive case involving such a powerful bank the private sector and given the fact that for one year and you know the FIR was not even registered so all these things just tell me that this is a highly politicized case that there is a lot of people big names in world most definitely so everything now becomes extremely suspicious even innocent act now may be interpreted very differently because this case actually from the very moment the whistleblower brought out his report it has been totally ignored by the regulatory agencies but I see I see a bank board when you say regulatory agencies you mean the Reserve Bank of India you mean the Securities and Exchange Board of India who else to you would you include in that category you know all of them whether there's enforcement directed if there was outside money which is there's a possibility of so all these agencies and this is what I see repeatedly really that whistleblower reports normally are totally ignored and this represents would you say a kind of a regulatory lapses which leads to crony capitalism whether it's regulatory lapses or whether it's regulatory capture I think that needs to be investigated because in some cases I would argue it's regulatory capture thank you so much Mr. Hazari for giving us your views this is the first in a series of conversations that I'm going to have with you and in the next episode let's discuss the IL and FS story that's the infrastructure leasing and financial services story which too is an important non-banking financial company which seems to have collapsed resulting in waves of ascending many sectors of the financial markets into turmoil so thank you once again and you just heard independent analyst of India's banking sector Himindra Hazari discussing the entire episode concerning the ICICI Bank Mrs. Chandakochir her husband the videocon group and most importantly the government's actions and Finance Minister Arun Jaitley's comments on the manner in which the Central Bureau of Investigation registered a first information report in which big names in the banking sector have been named in the next conversation that I will be having with Mr. Hazari we look at the IL and FS story keep watching news click and thank you for being with us