While, it has been categorically maintained by the board of the ICICI bank that Ms. Chanda Kochhar is not to be blamed alone, what is the overall reality and what it is that the board of the bank has brought to itself with all this decision-making? Mr. Akhilesh Bhargava, Business Editor of HW News Network shares his insights on the matter in the video.
Why ICICI findings must be made public?
Since the time the malpractices come out in the open in February 2018, that there has been gross misconduct in the management of ICICI Bank, at the highest levels. That included its high profile CEO Ms. Chanda Kochhar, its complaisant board of directors and also its auditors, who did not object/report on these misdoings. Why should not the ICICI findings must be made public? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance, shares his insights on the matter.
ICICI Findings Must Be Made Public
It is a well known fact, since the time the malpractices come out in the open in February 2018, that there has been gross misconduct in the management of ICICI Bank, at the highest levels. That included its high profile CEO Ms. Chanda Kochhar, its complaisant board of directors and also its auditors, who did not object/report on these misdoings. What is now being probed by a slew of agencies which includes SEBI. ITD and the CBI, is not just charges of negligence and violation of the corporate code of conduct, but also deliberate non disclosure of information and corruption. At the centre of this investigation, which seeks to unravel the truth is SEBI, for violation of listing norms and the code of corporate governance and Justice B. N. Srikrishna for conflict of interest, quid pro quo in loans given and the code of conduct violations. An internal audit team of ICICI Bank and the RBI is also probing systemic negligence/lapses in loans given.
While little is known of the Justice Srikrishna enquiry, which is at a preliminary stage, there is some information known about the status of the SEBI proceedings against Ms. Chanda Kochhar and ICICI Bank, both have not responded to the SEBI notices and have been seeking adjournments. The very fact that multiple adjournments have been sought and no meaningful reply has been given, indicates that there is substance in the allegation of violation of norms of disclosure, corporate governance, conflict of interest and quid pro quo for loans given. A similar situation of a series of adjournments, is said to be so, in the case of the income tax proceedings, against the Kochhar family.
Thus while ICICI Bank and Ms. Chanda Kochhar have not yet responded to the umpteen SEBI notices, the Business Standard now reports that ICICI Bank is intensely pursuing SEBI to settle the matter through a consent plea, which would involve no hearing as such, and yet a closure of the case. That is like an out of court settlement, where ICICI Bank will not plead guilty of charges and will be let off by SEBI, through the levy of penalty or through lighter charges. The new chairman of ICICI Bank Shri Girish Chandra Chaturvedi and its COO Mr. Sandip Bakshi are said to have met the SEBI chairman, pleading for a settlement through a consent plea. At present SEBI has given them a fresh date of August 24, 2018 to file their submissions, in response to its charges.
A settlement/closure of the ICICI case, which involves serious malpractices, detrimental to public interest, means a kind of a hush hush closure of the case. The public which has a huge stake in the Bank needs to be made aware of the findings of investigations, which perhaps would be dropped upon such consent closure of charges by SEBI. ICICI Bank is a large public institution and the malpractices which have damaged its reputation and have eroded its shareholder wealth need to be made public and the guilty must not be let off easily, as happens in the case of a consent plea. Every probe agency must conduct a detailed investigation into the ICICI affair and the findings must be made public.
De Beers & The Diamond Crisis
The Indian diamond industry which is a major contributor to India’s foreign trade, is a study of contrasts. Its customs certified imports/exports run into billions of dollars, but are interlaced with hawala, tax evasion and FEMA violations. It polishes 90% of the world’s diamonds and is thus deeply interfaced/interlinked with modern global trade, but it is yet run in a traditional desi style, often violating the laws of the land. It deals in diamonds, a most precious item, but often the supporting documents are missing. It relies on traditional couriers, the angadias, for delivery logistics, but often with no paper trail. It is a hugely valuable glamorous item of wealth, but the profit margins in its trade are wafer thin. The entire aura built around a diamond is that of trust and reliability, but more and more diamond companies have cheated banks, such that the infamous duo of Mehul Chokshi and Nirav Modi, have become the poster boys of the industry. The diamond industry today has lost its sheen. It is tainted and is in the doldrums, with dwindling fortuners.
As if these problems were not enough, yet another crisis has hit India’s diamond industry, which is of a dimension not witnessed till date. It is well known that De Beers, the South African giant owned by Anglo American Ltd., has had an iron grip/monopoly over the global diamond industry since over 60 years. If used to control the world diamond business, right from mining to marketing. It is De Beers that coined the memorable slogan, á diamond is forever’, in order to build an aura and allure around the diamonds and market them. If has also consistently battled the onslaught of much cheaper synthetic diamonds under its slogan, ‘rare is real’. The monopoly of De Beers was broken by Alrosa, a Russian company and Rio Tinto an Australian company, about a decade ago. And recently Anglo American, the parent of De Beers was acquired by Vedanta, the company owned by Anil Agarwal, the London based billionaire NRI, by becoming its largest shareholder.
In a strange coincidence or maybe in a deliberate move, De Beers has started marketing synthetic diamond jewellery, under the brand Lightbox, which costs a fraction of the real diamonds that De Beers earlier swore by. Interestingly industry experts now state that a synthetic diamond and a natural one are similar (akin to a natural pearl and a cultured pearl), so why pay much more for a natural stone.
As a result of this marketing campaign, the prices of real diamonds have crashed. In the diamond markets of Mumbai and Surat, diamonds are available at a hefty discount of upto 30%, with liberal payment terms and yet there are no buyers for them. With a major erosion in the value of their inventory and no buyers either, diamond traders are suffering huge losses. A spectre of huge losses and cash shortage now stares in their face. While in the earlier crises, like that of bank loan defaults, the diamond firms illegally gained by not repaying bank loans and siphoning away the funds, this time they are incurring huge losses in reality, because the dethroned diamond king De Beers seems to have resolved to kill competition, by killing the industry itself. A large number of Indian diamond firms face imminent bankruptcy, with no way out of the predicament of falling diamond prices.