Whistle-blower Arvind Gupta, who exposed the alleged Videocon loan fraud, has levelled fresh allegations of quid pro quo on ICICI Bank MD and CEO Chanda Kochhar. He has claimed that the ICICI Bank had favoured Ruia brothers of Essar group for 'round-tripping' investments into Chanda Kochhar's husband Deepak Kochhar's NuPower Group - a firm which is at the centre of current Videocon loan probe.
In a letter addressed to Prime Minister Narendra Modi on May 11, the whistle-blower said that the Ruias funded the NuPower and its subsidiary through their son-in-law Nishant Kanodia and nephew Anirudh Bhuwalka during December 2010 to March 2012 by subscribing to compulsorily convertible preference shares and equity shares. His letter states that Nishant Kanodia (husband of Ravi Ruia's daughter Smiti Ruia) invested in NuPower via Firstland Holdings, Mauritius -the holding company of Matix Group (co-promoted by Kanodia).
Firstland Holdings, Mauritius subscribed to a total of 3,243,752 share of Rs 1,000 each of NuPower Renewable Ltd during December 31, 2010, to March 21, 2012, in four different tranches amounting to Rs 324.37 crore, as per the RoC filings by NuPower. Anirudh Bhuwalka-owned A-One Motors and Services Ltd acquired NuPower Technologies through AMW Motors Ltd which is owned and controlled by Asia Motor Works Holdings Ltd -- eventually controlled by the Essar Group, the letter claims.
It further said that "Essar Group has round tripped investment payments to NuPower group via Firstland Holdings, Mauritius and had handsomely rewarded Deepak Kochhar...The Matix Group front ended the Firstland Holdings, Mauritius for investing Rs 325 core in the NuPower Group -- the group owned by the husband of Chanda Kochhar". Evidently, the malice of quid pro quo extends to another crony capitalist - the Ruia brothers of the Essar Group now headquartered in Mauritius -- the safe haven and a safe passage for global money laundering," Gupta said.
According to the letter, these dealings happened during the period when Essar Group got sweetheart deals from ICICI Bank's overseas branches in Singapore, the UK and New York to acquire Essar Steel Minnesota in USA and Algoma Steel in Canada. The ICICI Bank - as a lead banker in a consortium - lent USD 530 million to Essar Steel in 2010, to Essar Oil USD 350 million to acquire Stanlow refinery in the UK. "All these investments by the Essar Group turned bad and have faced liquidation and bankruptcy proceedings for recovery of the investments," Gupta said in his letter.
The whistle-blower further alleged that Essar Capital Holdings-Mauritius compensated the Matix Group for funding NuPower Renewable group by subscribing to the equity offering by the Matix Fertilisers and Chemicals during December 2010 to August 2011 by buying 163,540,343 shares of Rs 10 each for Rs 163.53 crore.
The ICICI Bank refused to comment on the fresh charges levelled by Gupta. However, on Essar Steel Minnesota loans, it said that "a consortium of seven Indian banks including ICICI Bank had sanctioned loans to the entity. Also, large US funds gave loans to the company. Out of the total debt of the company of USD 1.02 billion, ICICI Bank's share was less than 25 per cent."
According to the bank, the loan facilities provided to this project were classified as non-performing by all lenders. It said that the bank had followed all the internal processes of credit risk rating, credit appraisal and credit approval while sanctioning this loan. "Hence, it will be totally inappropriate and misleading to attribute any wrong motives to ICICI Bank for these loans," it said.
An Essar Group spokesperson termed the letter as motivated and said: "Essar does not have any business interest in Firstland Holdings Ltd." "Moreover, as we understand, AMW Motors Limited Mumbai has not made the investment of Rs 197 crore in Nupower, contrary to the claims made in the letter. Essar has been dealing with ICICI since 1980. All transactions with them have been made in a very open and transparent manner, and in accordance with all applicable laws of the land," the spokesperson added.
Matix Group also refuted the allegations and said: "Essar does not have any business interest in Firstland Holdings, contrary to what is being alleged. Firstland Holdings' investment in Nupower was made on merit to participate in the renewable energy sector, and has since been divested. No loans were ever taken by Matix from ICICI Bank."
This is the second letter that Arvind Gupta has written to Prime Minister Modi. In 2016, he had written the first letter in which he exposed the dealings between Chanda Kochhar's husband and Videocon Group. Currently, the CBI, ED and Income Tax are probing the charges made in the first letter.
Acting on the second letter, the ICICI Bank has constituted an independent enquiry to probe the allegations of 'conflict of interest and 'quid pro quo' by Chanda Kochhar. The independent enquiry will use forensics, review emails and record the statements of the relevant personnel. "The enquiry would also cover all connected matters in the course of the investigation to bring the matter to a final close," the bank said.