Chanda Kochhar’s indictment is just not enough
Fyodor Dostoyesky once said “Above all, don't lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others”.
This pretty well sums up the position of the board since 2016 when the whistleblower’s report was made public till Justice Srikrishna was appointed. Around all the din, if the ambient noise is cut out, all that remains is the fact that Chanda Kochhar, whose sense of right and wrong was largely shaped by her family’s immediate interests, was protected by a benevolent Board. What this would have done to the culture within ICICI Bank should be a matter of gravest concern to all its stakeholders.
I had written in May 2018 that what I found amazing was that the Board and insiders in the bank were blissfully unaware of all that was swirling around. In well managed companies there are inbuilt mechanisms to limit such exposures quickly, and without the need for detailed investigations. In any case, the issue of Rajiv Kochhar, the ubiquitous brother in law of Chanda Kochhar, who breezed in and out of the bank “advising” on many large ticket loan restructuring deals involving ICICI was known to all publicly : wasn’t this enough to apply the brakes ? The reasoning that this was not illegal, and brothers in law do not fall within the purview of “relatives” as defined in some statutes, is a weak and largely self-serving argument.
All this raises the more serious question on the management culture of what has commonly been projected as India’s best run bank in terms of professionalism and governance. Is it conceivable that it was only Chanda Kochhar alone who yielded such enormous and concentrated power that all other officials involved in approving transactions were forced to look the other way ? I don’t know the answer to this; but any rational investor and depositor will ponder if it is indeed too far fetched to consider the feasibility of others too dipping into the pot given the Board’s benevolent silence whilst such deals, involving the top executive’s immediate family, were the norm. Do remember that the Board cannot feign ignorance on “operating details” because as many as four members are executive directors of ICICI Bank.
Perhaps this is what the CBI based its conclusions on whilst casting the net wide to include both past and present directors and senior management. FM Jaitley’s blog chastising the CBI, and the immediate transfer of the investigating officer, has created immense confusion and indeed questions the government’s intent in truly cleansing the system in this high profile case.
The Board had an excellent opportunity to set things right and it is disappointing to see its intent in not pursuing the matter any further. Whilst the investigative agencies will focus on the strict legality of the issues raised, the Board should have focussed on the principles of ethical governance and what constitutes ethical leadership ,its place in contemporary governance of listed entities, and above all the need for Caesar’s wife to be above suspicion in the battle of perceptions which any leader fights on a daily basis……. more so, leaders of businesses involving public money and which are based purely on trust.
The tone for corporate culture is set from the top, and a display of its determination in this regard is critical to the message we wish to convey for the standards of governance we opt for within our country’s corporate sector. And how serious we really are in not only cleaning the system we have created for ourselves but demonstrating the will to set the tone for a resurgent future.
Firmly dealing with cases where other officials on various committees allowed a predetermined outcome by following the line of the CEO is part of this cleansing. Cowardice of the management team or “celebrities” is a reflection of the meekness of the society we live in. Leaders honed in this culture will find it difficult to drive this transformation the bank so desperately needs. Success is usually a reward for being a conformist and successful people, for all their qualities, are covertly or overtly subservient to these norms.
Such a society will hardly be a meritocracy or be able to break the nexus between the corrupt and the powerful.
Sometimes we are forced into directions we ought to have found ourselves. What defines us though is how we rise after falling. The Board may well have lost this opportunity.
The original version appeared in The Hindustan Times National edition dated Feb 01, 2019 as an Invitation Column >Article
(PRABAL BASU ROY)
A Sloan Fellow from the London Business School, PE Investor and Corporate Advisor, the author has formerly been a Director and Group CFO in various companies.
He is one of LinkedIn's Top Voices ; his views are frequently published in the national media on the intersection of current affairs, leadership and strategy with matters of finance, public policy, financial markets and corporate affairs.
Join me on Twitter.com @PrabalBasuRoy and feedback by email is welcome.
House of Children Book
5yHi
Syngenta Fellow
5yAgreed that it’s a good lesson and clear message for everyone. I wonder if the verdict would have been the same for a male? When you’re on the top people notice you. When you are on the top and you’re different from the rest of the crowd, are you more prone to be held to different standards? I am not saying what she did was right. If the same thing was done by a man, would the verdict be same?
Global Sanctions/AML(Advisor /CAMS/Corp.banking /Treasury Trainer and Consultant (ex. Std. Chartered/ABNAMRO/Royal Bk of Scotland )
5yLooking at the turn of events the board which was expected to follow the highest level of corporate ethics used all its powers at their disposal in defending Chanda Kocchar till the last moment. This was in spite of the fact that they were privy to all board level decisions taken on loans granted to Videocon group and whether all due-diligence processes were adhered to while sanctioning the loan. But once justice Sri Krishna commission was appointed and once they started their probe, these board members knew that the game was up and she was promptly dismissed when she was on leave. So much for the board’s credibility. Not only in ICICI bank case, for NPA fiasco in all public sector banks, the board members of respective banks are also responsible to a large extent. An impartial probe would prove this fact.
Independent Portfolio Advisor
5yIndeed a time n event to all those ppl who tried defend her with the philosophical tones. Let's accept one things as a nation where we will look into future by holding everbody accountable including us.