Chanda Kochhar and Carlos Ghosn

ICICI Bank's Board continued to express confidence in the bank's CEO despite serious allegations against her which were believed to be true by everyone except the wise Board. Nissan's Board threw out its Chairman relying on accusations believed perhaps only by the Board.

As yet, we do not have the response of Carlos Ghosn to allegations of financial misconduct against him. He was taken into custody the moment Nissan reported the findings of an enquiry. The accused in India are lucky to have the kind of police we have here who will not dare to arrest any influential person whatever be the gravity of offense. In fact, greater the gravity, the lesser the chances of arrest !

It is said that the offences that Ghosn is deemed guilty of, namely underreporting of income and personal use of company's assets, are not uncommon even in Japan and therefore do not invite the wrath of law-enforcing agencies. It is further argued that the Japanese do not want a French company, Renault, to dictate to Nissan. This 'nationalistic spirit' has led to the downfall of Carlos Ghosn reputed for his cost-cutting efficiency.

Japanese are known to be loyal to their bosses. It is therefore surprising that Ghosn's protege Saikawa, Nissan's CEO, let him down by propagating the alleged charges. Does it mean that the Japanese are loyal only to Japanese bosses?

Born in Brazil to Lebanese parents, Ghosn is a French citizen leading, among others, a Japanese company. Truly a global citizen, it is ironic that he has come to grief the way he did falling a prey perhaps to 'Japanese jingoism'.

"Chanda Kochhar is not guilty"

I am now convinced that Chanda Kochhar is not guilty of any misdemeanour. We have been barking up the wrong tree for quite some time. Here is why.

Figures speak louder than words. Similarly, statements speak louder than actions. So, I go by statements.
You may remember the three unforgettable statements of the recent past:

1) ICICI: The brother of one's spouse is not a relative according to The Companies Act for the purposes of related party transactions.

2) Deepak Kochhar: I did not inform my wife my business relationship with Venugopal Dhoot.

3) Venugopal Dhoot: When ICICI sanctioned loans to Videocon, I was not aware that Chanda Kochhar was associated with ICICI Bank.

If these statements do not convince you of Chanda Kochhar's innocence, you may want to question her yourself. What would be her reply to you?

Q: Are you aware of Rajiv Kochhar benefitting from your bank's clients?

A: Who is Rajiv Kochhar? I don't know anything about him.

Q: When did your husband tell you about his business deals with the promoter of Videocon?

A: My husband never told me anything about this. In fact, we do not speak to each other. We are a deaf-mute couple.

Q: Did you personally know Venugopal Dhoot when your bank sanctioned loans to his group?

A: Who is Venugopal Dhoot? When I studied the loan papers of Videocon group, I looked at the names of companies only. I was not distracted by irrelevant information like who was the promoter. We are a focused bank.

You may think these are imaginary. Yes, they are. If you really ask Chanda Kochhar these questions, you may get even more surprising answers. If she speaks, that is.

Chanda Kochhar: Flattered only to deceive?

Nobody expected Padma Bhushan Chanda Kochhar to place herself in a situation reeking of quid pro quo, nepotism and conflict of interest all in one. M.Damodaran, formerly of SEBI, was at his sarcastic best when he told an interviewer yesterday (Tuesday, April 10) that he never thought the Padma Bhushan Bank would descend to such depths of depravity. He calls ICICI Bank as the Padma Bhushan Bank for it produced the Padma Bhushan Trimurti, namely K.V.Kamath, N.Vaghul and Chanda Kochhar. He added poignancy to his observation by reminding that Ramesh Gelli, the creator and destroyer of Global Trust Bank had been awarded Padma Shri.

It is now reported that ICICI Bank is waiting for a direction from the regulator, RBI before deciding on the tenability of Chanda Kochhar continuing in office. Coming from ICICI Bank, this is a bit rich because this bank is not shy of violating RBI guidelines on various matters and has been penalised by RBI on several occasions. It is not clear why Chanda Kochhar does not realise that it is better to quit with whatever respect is left than to get the sack from RBI. It is a race to the bottom between ICICI Board and its MD.

M.K.Sharma, Chairman of ICICI Bank and N.Vaghul, a former chairman have sullied their reputation by rushing to pronounce that Chanda Kochhar is innocent. Chanda Kochhar herself has maintained a disturbing silence. Her husband has claimed that she is not aware of his business relationship with Venugopal Dhoot. If this is indeed true, it is too dangerous to have such a non-involved person as CEO of the bank. There ought to be a limit to spinning stories.

Shikha Sharma has acted with greater celerity in opting out of CEOship ahead of planned schedule. She has not allowed herself to become a butt of Governance jokes. Shikha's response has been welcomed, among others, by the stock market.

Chanda Kochhar's departure from ethical behaviour sets a bad example to thousands of bankers who held her in high esteem. She has miserably failed the Bagavad Gita test which says,

"Whatever action is performed by a great man, common men follow in his footsteps. And whatever standards he sets by exemplary acts, all the world pursues. (3:21) ( as translated by Srila Prabhupada)"

"Whatever a great man or woman does, others also do. Eminent people must in the public interest put forth their best virtues. Then ordinary people try to rise to that level." (Jack Hawley's translation.)

It will be in the fitness of things if the Padma Bhushan awarded to Chanda Kochhar is withdrawn and if the whistle-blower Arvind Gupta is suitably recognised.

Should Chanda Kochhar take a break?

Chanda Kochhar must be having horrendous times these days thanks to disclosures by the whistleblower, Arvind Gupta. She is only 56 years old and in the normal course she may continue as ICICI Bank's CEO and MD for some more years. (She became CEO and MD in 2009.)

Though the bank is not known for squeaky clean governance, nobody seriously suspected nepotism and blatant violation of ethical practices, save Arvind Gupta. He wrote to the PM, FM, SEBI and RBI two years ago. These authorities seem to have woken up suddenly now.

There are indications that all is not well in Axis Bank also. Shikha Sharma has come in for adverse notice by RBI. She was appointed the CEO and MD of Axis Bank around the same time as Chanda Kochhar became ICICI Bank's CEO. Both these persons were groomed and mentored by K.V.Kamath in ICICI Bank.

Nine years as CEO is an adequately long period to become accountable for any managerial misdemeanour. It is now worth asking if the private sector banks are mismanaged because their CEOs have a much longer tenure than desirable just as public sector banks are suffering from their CEOs' shorter than necessary tenure.

This philosophical question apart, Chanda Kochhar is verily facing an existential crisis in the bank. The bank's Board has expectedly and dutifully thrown its weight behind her. Yet, the fact remains that Chanda Kochhar has willy-nilly to spend a lot of her time agonising over various governance issues that are now talk of the town. The allegations may or may not prove her guilt, ethical or legal. But the damage is done for the bank and her.

Even if Chanda Kochhar cannot ultimately be faulted for any lapses which again may or may not be proved, she cannot now be in a position to do full justice to her role as leader of the bank. In these trying circumstances, she will do well for herself and the institution to quit her position at least temporarily till all enquiries are completed. The Board may hesitate to suggest this to her. But she has an opportunity to prove that she considers bank's interests to be more important than her own.

ICICI Bank claims that its culture ensures organic growth of leaders within the organisation. So there should be no dearth of managers within the bank who can easily fill up the void that Chanda Kochhar's exit may create.