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Arvind Gupta's letter to the PMO

In a letter to the PMO, Arvind Gupta had spoken of 'illicit banking and commercial relationship’ between Videocon Group and ICICI Bank MD & CEO Chanda Kochhar’s family.

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Arvind Gupta's letter to the PMO

  1. 1. Shri Narendra Modi Hon’ble Prime Minister of India Prime Ministers Office Raisina Hills New Delhi – 110 001 15 th March 2016 Subject: Appeal to seek an appropriate investigation into illicit banking and commercial relationship between Videocon Group of Venugopal Dhoot and ICICI Bank’s MD & CEO Chanda Kochhar’s family owned NuPower Renewable Groupsteered by her husband Mr. Deepak Kochhar for amassing wrongful personal gains deceiving Stakeholders, Shareholders, Public / Private Sector Banks and Indian Regulatory Agencies for unjust and illegal enrichment through corrupt banking practiceswithin India and tax heavens by a high level CBI/ED/SFIO/SEBI/the RBI team to ensure healthy private sector Banking. Dear Mr. Prime Minister, Sir, Being a vigilant investor shareholder of the Videocon Group and the ICICI Bank, I am committed to bring about transparency and good corporate governance for healthy functioning of the Indian private corporate sector and the private sector Banks, I am constrained to seek your kind intervention for preventing certain dirty banking practices and illicit corporate dealings by persons interested in amassing wrongful personal gains. This adds to the erosion of the corporate quality of Bank Funded Assets. Sir, the fact that the Videocon Group led by Mr. Venugopal N. Dhoot has made hefty political contribution of Rs. 11.1 crore to the Bhartiya Janta Party’s (BJP) led Union Government during the year 2014, as against just Rs. 5 lakh in the previous year, should not deter the Government to order an appropriate independent investigation to bring out the truth relating to opaque corporate transactions and prevent impending banking crisis in the ICICI Limited. The Videocon Group is heading deep into crisis and will soon become drain on Banks as Non Performing Asset despite the ICICI Bank offering them murky financial supports. This is a serious misgovernance issue and deservers your intervention or else the reputation of the Government will get tainted. Please read this representation in conjunction with a detailed corporate dossier Annexed herewith (Annexure: 1– 22) detailing chronology of events relating to nexus between the ICICI Bank CEO&MD specifically with Venugopal Dhoot of Videocon Group. The Dhoots of Videocon Group have dubious business track record of pursuing Unfair Trade Practices post economic reforms initiated by the Congress led UPA Government. The Videocon Group has cheated and defrauded millions of small investors and State Government Financial Institutions in Gujarat. In September 1992, the undersigned acted as a whistle blower, and the Hon’ble MRTP Commission had then stalled the public offering by the newly established Videocon Narmada Electronics Limited (VNEL) public issue at a hefty premium circumventing the then prevailing laws. VNEL - a JV with Gujarat Narmada Valley Corporation turned sick and got merged with Videocon International Limited. The group has conned million of small investors and amassed wealth manipulating the government and judicial machinery to their advantage. Through this representation the undersigned is again blowing the whistle laud and clear to seek your intervention in the matter to avert corporate fraud on investors and the Indian private sector Banks. Over the past two decades the Videocon Group, has spread business interests in India and overseas markets covering Consumer Electronics, Oil and Gas Exploration, Telecom and Power sectors enterprise and has established several oversea entities including tax heavens. The Group fortunes have been sinking and the investors have lost money yet the promoters have become wealthy by enjoying their proximity to the people who matter in corridors of power. You may be shocked to know that the Videocon Group – led by the Videocon Industries Limited – has a debt of Rs. 45,405 crore for the financial year (FY) 2014-2015 on books. Over the years the absolute debt
  2. 2. levels have risen unabated despite assets sales both partly due to ongoing capex but substantially due to operational losses. The absolute debt levels have risen from Rs. 12,000 crore (Cr) in FY 2011 to Rs. 45,405 Cr as of December 2014. The Auditors have already reported that the Videocon Group has made default of Rs. 1820 Cr during FY 15 in repayment of debt of up to 360 days. In fact, the internationally reputed Research firm Credit Suisse in their famous report entitled “House of Debt” released on 21 st October 2015 has identified the Videocon Group as number 4 th largest Corporate as “House of Debt” under high financial stress in India. The fortunes of Videocon Group rests on fresh borrowing to service mounting debts. Now the survival of the Group precariously depends upon Dhoots brother’s ability to obtain sweetheart deals from their bankers for bail out dealings. The ICICI Bank has fallen pray to their design. Under a premeditated conspiracy the Videocon Chief Venugopal Dhoot incorporated a Joint Venture business enterprise with Deepak Kochhar – husband of the CEO&MD of ICICI BankMs. Chanda Kochhar way back on 24th December 2008 in the name of NuPower Renewables Private Limited as 50:50 joint venture (JV). The NuPower Renewables is a JV between Venugopal Dhoot and his brother Rajkumar Dhoot and Deepak Kochhar along with his wife and his financial services company – Pacific Capital Services Private Limited established in 1999 – where Ms. Chanda Kochhar is the ultimate financial beneficiary of the Joint Venture with the sinking Videocon Group. RISE OF KOCHHAR’S OWNED JOINT VENTURE – NUPOWER RENEWABLES LIMITED FUNDED BY THE VIDEOCON GROUP CHIARMAN VENUGOPAL DHOOT: In December 2008, Venugopal Dhoot and Kochhar’s family conspired and incorporated a private joint venture company named NuPower Renewables Private Limited in Mumbai wherein both the Videocon Group Chief Venugopal Dhoot and the family of Chanda Kochhar – her husband and father/sister-in-law owned 50:50 joint equity ownership. The first Directors of the NuPower Group included: 1. Mr. Venugopal N. Dhoot 2. Mr. Deepak V. Kochhar 3. Mr. Saurabh P. Dhoot. The list of initial subscribers of the NuPower were the Dhoot brothers family including Venugopal Dhoot, Saurabh Dhoot (son of Venugopal’s brother Pradeep Dhoot), Rajkumar Dhoot and Deepak Kochhar and Kochhar’s owned Pacific Capital Service Private Limited. The Pacific Capital Services Private Limited then was owned 90% by Mrs. Neelam Advani (wife of Mrs. Chanda Kochhar’s brother Mahesh Advani) and 10% by Mr. Virendra Kochhar (Father-in-law of Mrs. Chanda Kochhar). Mrs. Chanda Kochhar was ICICI Bank’s Joint MD & Chief Financial Officer (CFO) till early 2009. In May 2009 Chanda Kochhar became the CEO & MD of ICICI Bank Limited. Upon Chanda Kochhar becoming CEO & MD the identity and ownership of the NuPower Renewables Private Limited was masked by transferring the shareholding to “Pinnacle Energy” (A Trust) where Mr. Deepak Kochhar the husband of Chanda Kochhar is the Managing Trustee. As per the Valuation Report doctored by the E&Y dated 10 th December 2014 the shareholding pattern of the NuPower Renewables Private Limited as at 31st March 2014 constituted equity ownership as 92.7% with Pinnacle Energy (A Trust) with Mr. Deepak Kochhar as Managing Trustee and Other owned 7.3% shares in the NuPower. In June 2009, after Chanda Kochhar became the CEO & MD of the ICICI Bank laired transfers were carried out to mask the true identity of the NuPower Group. Both the group of shareholders namely, Venugopal Dhoot and his family and Pacific Capital Services Private Limited owned by Kochhar’s transferred their shareholding in NuPower Renewables Private Limited toSupreme Energy Private
  3. 3. Limited (Supreme Energy). The Supreme Energy is essentially a shell company fully owned by Venugopal Dhoot only to effect shoddy private financial transactions. The rise of the NuPower Renewable Private Limited funded by the Videocon Group became more significant when in the 2009-2010 the Supreme Energy funded NuPower Group by Rs. 64 crore by subscribing to its zero coupon fully convertible debentures since: (i) Supreme Energy owned by Venugopal Dhoot funded Rs. 64 crore by way of extending unsecured loans which it borrowed from one of the listed company owned by Videocon Group, (ii) Subsequently, Supreme Energy surreptitiously converted this loan belonging to the small shareholders of Videocon Group into zero coupon optionally convertible debentures. However, in violation of the laws, the details of the debenture holders have not been disclosed either in the Annual Return or in the accounts filed with Registrar of Companies, which is a mandatory requirement. The Annual Reports filed by the NuPower Group reveals that the funds received by the Supreme Energy from the Videocon Group were utilized to purchase the Wind Energy Generators. As a result a finance company owned by Chanda Kochhar’s family became a Wind Energy generation company styled as – NuPower Renewable Private Limited. Further, In March 2012, NuPower further allotted 18,97,500 equity shares of Rs. 10 each, aggregating Rs. 1.89 crore to Deepak Kochhar and 1,00,000 equity shares of Rs. 10 each to Sunil Bhuta (the CFO of NuPower Group). As a result of this allotment, Deepak Kochhar acquired substantial stake of 92.67% of diluted equity share capital in NuPower Renewables Private Limited and the Supreme Energy got reduced to minority holding of 2.32% and the rest is held by their employees. It is pertinent to note, while the Venugopal Dhoot of Videocon Group invested Rs. 64 crore through the Related Party in NuPower Renewables, its shareholding in NuPower got reduced to just 2.32%, whereas just with the investments of only Rs. 1.89 crore Deepak Kochhar acquired 92.67 % stake in NuPower Renewable Private Limited. Interestingly, in March 2012, itself shares of NuPower Renewables Private Limited (NRPL) held by Deepak Kochhar were transferred to Pinnacle Energy (A Trust) whose managing Trustee is Deepak Kochhar himself. The present shareholding structure (as of 31 st March, 2015) of NuPower Renewables Private Limited is as under: Name of the shareholder No. of shares % Holding Pinnacle Energy (a Trust) through Its Managing Trustee Deepak Kochhar 1,897,500 92.67 Deepak Virendra Kochhar 2,500 0.12 Supreme Energy Private Limited 47,496 2.32 Mahesh Chandra Pungalia (employee of Videocon Group) 1 0.00 Sunil Bhuta 100,000 4.89 Shruti Sunil Bhuta 1 0.00 Bhupinder Singh Bajaj 1 0.00 Prem Rajani 1 0.00 DH Renewables Holdings Ltd, Mauritius 1 0.00 Total 2,047,501 100.00 The E&Y Merchant Banking Services – a subsidiary of the Ernst & Young LLP valued the enterprise value of NRPL as at 31 March 2014 at Rs. 1092 crore! The role of Merchant Banking arm of accounting giant E&Y becomes questionable for over valuing the NRPL. QUID PRO QUO DEAL BY CHANDA KOCHHAR’S ICICI BANK LED DIRTY DEALINGS WITH VENUGOPAL DHOOT IN SAVING VIDEOCON GROUP FROM DEBT DEFAULTS:
  4. 4. Once again, during the Congress led UPA government the ICICI Bank headed by Chanda Kochhar extended sweetheart funding to the Videocon Group both in India and abroad through companies established in tax heavens like the Cayman Ireland and Mauritius. In April 2012, just after complete transfer of ownership and control of NuPower Renewables to Kochhar’s family the ICICI Bank extended Rupee loan to various private companies belonging to the Videocon Industries Limited to the tune of Rs. 3,250 crore as per the break-up given below: Rupee Loan of Rs. 3,250 crore to the Promoters of Videocon Group by ICICI Bank Name of the Company Date of ICICI Bank funding Amount of loan in Rs. Crore Trend Electronics Limited 30.04.2012 650 Century Appliances Limited 30.04.2012 650 Kail Limited 30.04.2012 650 Value Industries Limited 30.04.2012 650 Evans Fraser & Company India Limited 30.04.2012 650 Total 3,250 In addition, the helping hands of the ICICI Bank extend overseas destinations as well. The ICICI Bank extended offshore funding amounting to Rs. 660 crore to another foreign entity owned by the Videocon Group. A Videocon Group Company based in Cayman Islands namely Tuskar Overseas Inc. was also funded by ICICI Bank Ltd through its UK and Canada branches with a massive sum of Rs. 660 Crore. The said offshore loan was backed by guarantees given by six Indian Videocon Group firms including Tek Care India Pvt. Ltd, Shree Dhoot Trading and Agencies Ltd, Value Industries Ltd and Trend Electronics Ltd. Sir, round tripping foreign investments in Indian corporates has been a subject of curious investigation to unearth host of scams perpetrated by the Congress led UPA Government. It is against this background that the Bank funding provided by the ICICI Bank to Videocon Group assumes significance. The above said banking transaction reflects a deep-rooted conspiracy on the part of ICICI Bank’s lending arrangement with the Videocon Group. Such transactions constitute Indian private sector Banking scam. Evidently, Mrs. Chanda Kochhar facilitated this unscrupulous domestic offshore funding in abuse of her position as the CEO & MD. Chanda Kochhar’s greed of making private gains by corrupt means has resulted in wrongful losses to the ICICI Bank and the ICICI Bank’s future is in a precarious financial condition. There are - serious risk of sticky loans extended to groups like the Videocon promoted by Venugopal Dhoot becoming NPA’s with the ICICI Bank. Mrs. Chanda Kochhar’s actions are in conflict with the interest of the ICICI Bank and deserve to be strictly dealt with by the RBI. Furthermore, during the period between December 2010 and March 2012, NuPower Renewables also received large overseas funding’s aggregating to Rs. 325 crore in the form of compulsorily convertible preference shares (CCPS) from an obscure Mauritius based entity named Firstland Holdings Limited. Later in 2014, the above funding was shifted to another Mauritius based entity named DH Renewables Holding Limited. In December 2014, a further sum of Rs. 66 crore was funded by the same entity DH Renewables Holdings Limited, Mauritius. DH Renewables Holdings Limited, Mauritius is wholly owned subsidiary of Accion Diversified Strategies Fund SPC, a company incorporate in Cayman Islands and having its head office in Singapore. It needs to be investigated whether the funding to Renewable Holdings from Mauritius have any corporate clients of ICICI Bank link with the Kochhar’s owned NuPower Renewables Private Limited. A careful evaluation of the information dossier attached compiled from the available published sources and information available in public domain leads to disquieting inferences. A corrupt nexus between the ICICI
  5. 5. Bank’s Chief Chanda Kochhar dealings with the Videocon Group Chief Venugopal Dhoot and his family is well established. Videocon Group gifted the remaining equity stake held by Supreme Energy in NuPower Renewables Private Limited to Deepak Kochhar’s Pinnacle Energy. On 29.09.2012, after the disbursement of loans of Rs. 3910 Crore (3250 + 660) by ICICI Bank to various firms of the Videocon Group. The Group also transferred the ownership of Supreme Energy to Deepak Kochhar’s Pinnacle Energy (A Trust). Thus Deepak Kochhar became absolute owner of NuPower with 95.11% equity stake. With the generosity of Videocon Chief Venugopal Dhoot the NuPower Group is under complete beneficial ownership of the ICICI Bank Chief & MD Mrs. Chanda Kochhar. This is serious abuse of authority and deserves to be thoroughly probed to protect the interests of the ICICI Bank’s stakeholders and save the Bank from sub prime assets. In the light of above submissions the Government should institute an investigation by the CBI / SFIO / ED / SEBI / RBI etc. into the corporate banking affairs of the ICICI Bank and its corrupt dealings with the Videocon Group and other leading sticky Corporate Houses bank dealings with the ICICI Bank under the Prevention of Corruption Act. Therefore, In order to protect the health of our banking institutions and in the interests of millions depositors of ICICI Bank and to safeguard investors money, may I again request that a high-level anti-corruption investigation by CBI/ED/ SFIO/ SEBI and the RBI may please be ordered in the matter to avert corporate bankruptcy of private sector Bank like the ICICI Bank and corporate collapse of the Videocon Industries Limited before its is late. The Hon’ble Supreme Court Bench headed by Justice Ranjan Gogoi and Justice PC Pant have held that all officials of a private bank operating under the license issued by the Reserve Bank of India are to be defined as public servants under the Prevention of Corruption Act and be prosecuted like the public servants for corrupt practices. The Government committed to transparency and good governance must act accordingly. Thanking you in anticipation of a prompt action in a matter of great public importance. Yours sincerely, (ARVIND GUPTA) E-mail: trust_arvind@yahoo.com Mobile: 9871798080 Shareholder Folio No: 479887 (VIL) Client Id: 10778640 (ICICI Bank) CC: Mr. Arun Jaitley Union Minister of Finance and Corporate Affairs Ministry of Finance, North Block, Raisina Hill, New Delhi 110011 Dr. Raghuram Rajan Governor, Reserve Bank of India Central Office Building, 18th Floor, Shahid Bhagat Singh Road, Mumbai 400 001
  6. 6. Mr. UK Sinha Chairman, The Securities and Exchange Board of India Plot No.C4-A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 Mr. K V Chowdary Central Vigilance Commission Satarkata Bhavan, A-Block GPO Complex, INA New Delhi - 110 023 Mr. Anil Kumar Sinha The Director Central Bureau of Investigation Plot No 5-B, CGO Complex, Lodhi Road, New Delhi-110003 Mr. Karnal Singh Director Enforcement Directorate 6th Floor, Lok Nayak Bhawan Khan Market, New Delhi 110003 Shri P.K. Tiwari Director, FIU-IND Financial Intelligence Unit - India 6th Floor, Hotel Samrat Kautilya Marg, Chanakyapuri New Delhi -110021, India Mr. Ratan Watal Finance Secretary & Secretary (Expenditure) Room No. 128-A, North Block, New Delhi 110001 Dr. Hashmukh Adhia Secretary Revenue North Block, New Delhi 110001 Mr. Najib Shah Director General Department of Revenue Intelligence 7th Floor, D Block, I.P.Bhawan, I.P.Estate, New Delhi Mr. Nilimesh Baruah The Director Serious Fraud Investigation Office Ministry of Company Affairs, 2 nd Floor, ‘B’ Wing, Paryaveran Bhawan, CGO Complex, Lodhi Road, New Delhi, 110003

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