Another day, another whistle blower letter that could come back to haunt Chanda Kochhar and Co.
A fresh whistle blower letter with familiar allegations received by Indian and Singapore investigators allege tax evasion, illegal routing of transactions, violations of foreign exchange regulations, accepting bribes and more. These allegations are levied against Deepak Kochhar, husband of former ICICI Bank MD & CEO Chanda Kochhar and his brother Rajiv Kochhar.
A Singapore based whistle blower, in a letter to investigative agencies, including the Enforcement Directorate and CBI, claims that Deepak Kochhar and his brother Rajiv Kochhar were running multiple companies in Singapore, Cayman Islands and India where they accepted kickbacks from various corporate groups.
How the scheme operated is like this. Known defaulter corporate groups such as Jaypee Group, Suzlon, Bhushan Power & Steel, Sterling Biotech etc, to whom banks would hesitate to lend money, were readily advanced substantial loans by ICICI Bank. These companies would then pay huge amount of fees, which were under the head “advisory” or “consultancy” fees to a company named Avista, which was a Singapore based firm controlled by brothers Deepak and Rajiv Kochhar. In many instances where the kickback amount could not be remitted through Indian entities, the money was remitted to Avista through off shore companies.
Besides, the complaint also highlighted that even though the work was done by Avista through its Indian office, the fees (which constituted the kickback) was taken in Cayman Islands or Singapore in order to evade tax.
The letter specifically mentioned “remittances received by these companies (i.e. the defaulters) show that bank money was routed and sent to Avista Offshore for favours granted in India by ICICI Bank”.
The letter detailed another scheme whereby Rajiv Kochhar was taking one of his joint venture partners, an American company, for a ride. The company was informed that the entity was making losses, where as in reality, the money was diverted and being taken offshore in various entities.
In an e-mailed response to Business Standard, Rajiv Kochhar refuted all the allegations and stated that the information was false, baseless and incorrect. He went to say that he strongly denies there is any material to even remotely suggest there is violation of any laws.
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