ContentTeam

KashishKhanduja|MBA4|2022-24

ManthanJain|MBA7|2022-24

The ICICI Bank-Videocon case is one of the most significant frauds the Indian banking industry has ever encountered; this led to the downfall of Chanda Kochhar, who began her career as a junior officer and ascended to become the bank's CEO The case involves claims of a quid-pro-quo arrangement between the Kochhar family and the Videocon corporation

Mrs Chanda Kochhar was the head of the ICICI bank and was formerly lauded for her role in shaping the retail banking sector and establishing ICICI Bank in the 1990s However, she was caught in a nepotism scandal and conflict of interest involving a ₹3,250 crore Videocon Group scam. The scam centred on a loan given by ICICI Bank to the Videocon group as part of a State Bank of India (SBI)-led consortium in 2012 and the change of ownership in a company called NuPower Renewables Pvt Ltd , which was a joint venture between Chanda Kochhar's husband Deepak Kochhar and Videocon's Venugopal Dhoot

The Case

Deepak Kochhar and Chanda Kochhar were probed after Deepak Kochhar's NuPower Renewables received ₹64 crore funding from one of Venugopal Dhoot's companies in the form of unsecured fully convertible debentures (FCDs), just weeks after the Videocon group received a ₹3,250 crore loan from ICICI Bank During Chanda Kochhar's employment at ICICI Bank from 2009 to 2011, six loans totaling ₹1,875 crores were allegedly sanctioned for the Videocon Group and its affiliated entities. The Enforcement Directorate charged the Kochhar couple, Dhoot, and others with money laundering in 2019.

According to media reports, Venugopal Dhoot invested ₹64 crores in NuPower

Renewables through Supreme Energy Pvt. Ltd (SEPL) and transferred SEPL to Pinnacle Energy Trust managed by Deepak Kochhar via an indirect route, and most of the loans made during Chanda Kochhar's tenure became non-performing assets, causing bank a loss of ₹1,730 crore

The CBI claimed that the loan was approved by a committee on which Kochhar served According to the inquiry agency, she abused her official position and received illicit gratification/undue benefit from Dhoot through her husband for granting loans to Videocon In response to the claims, Chanda Kochhar issued a statement saying, "I stress that none of the credit decisions at the bank are unilateral The organization’s structure and design eliminate the possibility of a conflict of interest."

The CBI charged Chanda Kochhar, her husband, Videocon Group CEO Venugopal Dhoot, and companies NuPower Renewables, Supreme Energy, Videocon International Electronics Limited, and Videocon Industries Limited in an FIR filed under IPC sections related to criminal conspiracy and the Prevention of Corruption Act.

Timeline Of The Facts

2008

December: Deepak Kochhar, V N Dhoot and Saurabh Dhoot were appointed directors of NuPower Renewables (NRL).

2009

January: Dhoot resigned and allotted nearly 20 lakh securities to Deepak Kochhar.

May: Chanda Kochhar took over as ICICI Bank MD and CEO

June: NRL shares held by Dhoot and Deepak Kochhar were transferred to Deepak Kochhar’s company Supreme Energy August: The First Loan of ₹300 crores was given to Videocon International Electronics Limited (VEIL) in contravention of the bank’s rules and policy

2010

March: Supreme Energy, which was 99 99% owned by Dhoot, loaned ₹64 Cr to NuPower. By this time, a series of share transfers from Dhoot to Deepak to Pacific Capital took place to ensure Supreme Energy already owns 94 99% of NuPower with Deepak owning the rest.

November: Dhoot transferred the entire stake in Supreme Energy to associate Mahesh Chandra Punglia.

2012

ICICI Bank sanctioned ₹3,250 crore loan to Videocon.

2012-13

Over a few months, Punglia transferred his

99.9% stake to Pinnacle Energy Trust, where Deepak is reported to be the managing trustee, for ₹9 lakhs only

2016

October: The issue of alleged irregularities in loans came to the light, after a shareholder whistleblower Arvind Gupta, an investor in both ICICI Bank and Videocon Group, raised concerns through a blog Gupta alleged that Chanda Kochhar influenced a ₹3,250 crore loan to the Venugopal Dhoot-led Videocon group in 2012 in return for a deal in NuPower Renewables and Supreme Energy, a clean-energy firm run by her husband Deepak Kochhar. Gupta wrote to the PM and FM His complaint, however, gathers no attention

2017

The Videocon account was declared a nonperforming asset

2018

March: The case again came into the spotlight when another unnamed whistleblower complained against the bank and its top management, including Kochhar, alleging a deliberate delay in recognizing impairment in 31 loan accounts between 2008 and 2016 to save on provisioning costs. These allegations led to probes by multiple agencies, including the CBI, ED, and SFIO, and also questioning of Kochhar family members.

The bank indicated that it had evaluated internal processes for credit approval and 'found them to be solid ' According to the statement, the decision to lend to Videocon Group was made at the consortium level. Despite being a member of the lending committee that approved the loan, Kochhar had no personal stake in it. The bank's board also reaffirmed full faith in Kochhar, dismissing any misconduct on her part and ruling out any 'conflict of interest '

The Central Bureau of Investigation (CBI) filed an initial inquiry The investigative agency later also questioned Deepak Kochhar and his brother Rajiv Kochhar.

April: In defending its CEO, Chanda Kochhar, then ICICI Bank Chairman M K Sharma stated that the board had full confidence in her and ruled out any potential conflict of interest with reference to the loan made to Videocon group

The Serious Fraud Investigation Office (SFIO) sought approval from the Ministry of Corporate Affairs to investigate ICICI Bank's 3,250 crore loan to the Videocon group in 2012.

May: The Securities and Exchange Board of India (SEBI) sent a notice to ICICI Bank CEO and MD Chanda Kochhar about the lender's interactions with Videocon Group and NuPower Renewables, a firm promoted by her husband Deepak Kochhar In response to a 12-page show cause notice imposed on ICICI Bank and Kochhar on May 23, the market regulator has asked Kochhar and the bank to submit their responses by June 7 The ICICI Bank board started an independent probe.

June: The bank's board of directors appointed retired Supreme Court judge Justice BN Srikrishna to lead the independent panel. ICICI Bank and Chanda Kochhar requested more time for responding to the market regulator SEBI's show cause notice.

July: Kochhar was given until July 10 to respond to the show cause notice on the alleged infringement of listing disclosure rules. Kochhar and the bank missed the June 7 deadline and requested further time to reply to the notification owing to a lack of documentary evidence supporting the charges.October: The ICICI Bank board of directors approved Chanda Kochhar's proposal to retire early The bank stated that the board's investigation will be unaffected and that certain rewards will be contingent on the conclusion of the investigation

2019

January: The CBI filed an FIR against Chanda Kochhar, her husband Deepak Kochhar, and Videocon group MD Venugopal Dhoot in connection with alleged irregularities in bank loans made to the group in 2012

In the Videocon loan case, a panel led by Justice BN Srikrishna determined that Kochhar breached the bank's code of conduct. Following the report, the bank's board has stated that her separation will be treated as a "termination for cause" under their internal procedures

2020

September: The Enforcement Directorate arrested Deepak Kochhar as one of the main accused in the ICICI-Videocon loan case and was booked under the Prevention of Money Laundering Act (PMLA)

2022

December: CBI arrests all three of them Chanda Kochhar and Deepak Kochhar were arrested by the Enforcement Directorate in 2021 as well. The former ICICI Bank CEO got bail in February 2021, while her husband got bail in March 2021

Conclusion

This case raises questions about the corporate governance norms at one of Source: The Indian Express

India's largest banks. It is also clear that the issue of poor corporate governance is getting worse, and more concerted action is required to address it. The ICICI Bank case is only one of the many recent examples of corporate governance failures in India The bank seemed to have given the funds intentionally and without paying respect to the standards and regulations, they are required to uphold This emphasizes the significance of regulators maintaining strict oversight over corporate board activities during the period of corporate mismanagement

The effectiveness of corporate governance must be monitored and evaluated from time to time The bank's reputation was damaged by this case, despite the bank having a strong consumer brand.

Trips Waiver

Trisha Jain I MBA 6 | 2022-24

Sakshi Pandya I MBA 2| 2022-24

WHAT IS TRIPS AGREEMENT?

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) governs international IP rights TRIPS entered into force in 1995 as part of the World Trade Organization agreement (WTO) TRIPS establishes minimum standards for trademarks, copyrights, geographical indications, patents, industrial designs, layout designs for integrated circuits, and undisclosed information or trade secrets It applies fundamental international trade principles concerning intellectual property to member countries.

It applies to all WTO members The TRIPS Agreement establishes the permissible exceptions and limitations for balancing intellectual property interests with public health and economic development interests

TRIPS is the most comprehensive international intellectual property agreement, and it plays an important role in facilitating trade in creativity and knowledge, resolving trade disputes over intellectual property and ensuring WTO members have the flexibility to achieve their domestic policy objectives It frames the intellectual property system in terms of innovation, technology transfer, and public benefit. The TRIPS Council is in charge of administering and monitoring the TRIPS Agreement's implementation TRIPS was negotiated between 1986 and 1994 as part of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) The TRIPS Agreement is also described as a "Berne and Paris-plus" Agreement.

Intellectual property rights are the rights granted to individuals or organizations for creative innovation. These rights typically give the creator an exclusive right to use his or her creation for a set period Intellectual property is well established in India at all levels-statutory, administrative, and judicial. This Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement entered into force on January 1, 1995

It establishes minimum standards for intellectual property rights protection and enforcement in member countries, which are required to promote effective and adequate intellectual property rights protection in order to reduce distortions and impediments to international trade

The TRIPS Agreement imposes obligations on member countries to provide a minimum level of protection within their legal systems and practices.

History

It is crucial to review the events leading up to the WTO's establishment in 1995 and how it has operated in order to comprehend better arguments for a global IP waiver in the instance of COVID-19 items.

Transferring technology and intellectual property between the global North and South is not a new problem The necessity to catch up technologically with the industrialized global North as a method of economic transformation and to establish self-sufficiency was a top objective as numerous new nation-states began obtaining independence from crumbling European empires in the 1950s However, there were one-sided agreements for the transfer of technology from international firms to developing nations.

In the end, there was virtually little technology transferred or local capacity built, which led to these nations becoming victims of "technical colonialism." In order to bridge the technological divide and fight the IP systems that impeded their progress, the G77 resorted to the UN General Assembly for assistance.

The Declaration on the Establishment of a New International Economic Order (NIEO), which was adopted by the UN General Assembly in 1974, stated that the North would assist formerly colonised nations in becoming more independent through the transfer of technology. However, the call for an NIEO was rejected by the global North, with the US, in particular, refusing to give up on the enforcement of patent rules.

In 1995, the global North countries forced TRIPS through against the opposition of several Southern countries, and it became law. While the agreement safeguarded the corporations and investments of the countries in the global North, it also barred those in the global South from competing on an equal basis in the burgeoning knowledge economy Even in cases where they may not have done so before, the Agreement compelled WTO member states to establish a minimum degree of protection and enforcement for all categories of IP.

Trips Significance

The TRIPS Agreement incorporates intellectual property rights protection into the multilateral trading system embodied in the WTO. The agreement is frequently referred to as one of the WTO's three

"pillars," the other two being trade in goods (the traditional domain of the GATT) and trade in services Prior to TRIPS, the extent to which IP rights were protected and enforced varied greatly across nations, and as intellectual property became more important in trade, these differences became a source of tension in international economic relations.

Trips Waiver

In light of the COVID-19 pandemic, India and South Africa proposed to the World Trade Organization in October 2020 that the TRIPS Agreement (which included patent protection for pharmaceutical products, including COVID vaccines) be waived for COVID vaccines, medicines, and diagnostics for the duration of the pandemic in order to make COVID vaccines and drugs available to the greatest number of people worldwide

If vaccines are patent protected, only a few pharmaceutical companies from developed Western countries will be able to manufacture them, rendering such drugs unavailable or inaccessible to people in other countries, particularly developing and least developed countries, due to high costs.

The US, which had previously opposed any TRIPS waiver, has joined the EU in supporting this proposal. Many people applauded this decision because it could lead to the production of more COVID vaccines, allowing the entire world to be free of the coronavirus as soon as possible. However, pharmaceutical companies have objected to the move, claiming that it will not necessarily ensure vaccine availability because developing countries lack the capacity to produce the vaccines.

This argument rehashes the tired trope that producers in the developing world are either unable to build complex technologies or their products are of poor quality However, enough proof has emerged over the last two years to demonstrate that this claim is unpersuasive. Now, producers in China, India, Thailand, and Vietnam are working on their own mRNA vaccines

As a result of the World Health Organization's Access to COVID-19 Tools (ACT) Accelerator and financial support from Unitaid and the Foundation for Innovative New Diagnostics (FIND) and partnerships with manufacturers in China and Brazil, local production of COVID-19 rapid tests has increased in Africa and Latin America

A broad IP waiver may encourage other nations and firms to invest in building their own production capacity and capabilities, which would help with both the current pandemic and any other in the future. The World will be unable to decentralize supplies, satisfy global demand for this pandemic, and become ready for any future ones unless the IP monopolies that currently prevent vaccine, treatment, and diagnostic development and manufacture in other nations are unlocked