Oppose Chanda’s board appointment, shareholders told

Oppose Chanda’s board appointment, shareholders told

Chanda Kochhar. REUTERS

Proxy advisory firms have asked shareholders to oppose the proposed reappointment of Chanda Kochhar, MD and CEO of ICICI Bank, to the board of ICICI Securities (I-Sec).

"We don't advise for the appointment of Kochhar as she is on leave and won't be able to attend the meetings," Shriram Subramanian, MD, InGovern told DH.

However, according Subramanian the reputational risk is not that important as the company has already faced a hit due to the alleged fraud involving Chanda.

Yet another proxy advisory firm, Institutional Investor Advisory (IiAS) has also asked shareholders to oppose the proposed reappointment of Chanda to the board of I-Sec.

The IiAS recommendation comes on the back of an ongoing inquiry against Chanda’s alleged role in extending a loan of more than Rs 3,000 crore to conflicted parties.

IiAS believes that ICICI Bank will continue to have representation of its interests on the I-Sec board even without Kochhar, as Vishakha Mulye, Executive Director of bank, is on the board of I-Sec. According to IiAS, I-Sec should not be exposed to any reputational risks and regulatory scrutiny due to Chanda’s appointment in case of any adverse developments against her in the future.

"Chanda Kochhar will not be able to discharge her duties as a board member as she is on leave. So no purpose is served if you reappoint her now," Amit Tandon, Founder and MD of IiAS said.

He is of the opinion that once the investigation exonerates Chanda, that is when she should be brought back on the board, and that "we (IIAS) will support her reappointment."

In a recent filing to the US securities market regulator SEC, ICICI Bank said there was a possibility of increased regulatory scrutiny and reputational risks from these developments, which could materially and adversely impact operations and financial performance.

Chanda is currently on leave of absence from ICICI Bank since June pending outcome of the inquiry ordered by the bank.

The Central Bureau of Investigation (CBI) has registered a preliminary inquiry (PE) into alleged nexus between Chanda’s husband Deepak Kochhar and Videocon Group Chairman Venugopal Dhoot.

It is alleged that Dhoot provided crores of rupees to a firm promoted by Deepak Kochhar and two relatives six months after Videocon received Rs 3,250 crore as loan from ICICI Bank in 2012.

SEBI has issued a show-cause notice to Kochhar and ICICI Bank for failing to disclose the conflict of interest.