CBI books Videocon's Dhoot for 'corruption' in financing oil and gas assets

The CBI on Tuesday booked Videocon group Chairman Venugopal Dhoot for alleged corruption in the financing of their oil and gas assets in Mozambique in connivance with unidentified officials of a State Bank of India-led consortium, officials said.
The agency has registered the FIR after a preliminary enquiry on a complaint from the Oil Ministry.

The enquiry findings show that in 2008 Videocon Hydrocarbons Holding Ltd (VHHL), a subsidiary of the Videocon Industries Limited (VIL), acquired 10 per cent "participating interest" in Oil and Gas Block in Rovuma Area 1 block, Mozambique, from the US-based Anadarko.
The Mozambique asset was later acquired by ONGC Videsh Limited and Oil India Limited in January, 2014, for $2,519 million, they said.
In April, 2012, a consortium of banks led by the State Bank of India, and comprising of ICICI bank and IDBI bank, sanctioned Standby Letter of Credit (SBLC) facility of $2,773.60 million to VHHL for appraisal and development of their overseas oil and gas assets in Mozambique, Brazil and Indonesia and other funding requirements in relation to refinancing the existing facility.
The SBLC facility of $1103 million was refinanced which included an outstanding of $400 million to Standard Chartered Bank (SCB), London.
"The first charge on VIL's oil and gas asset was a part of SCB's security," the FIR said.
About 10 months later, VIL told the consortium that SCB loan has increased to $530 million, requesting to pay it and take over charge of oil and gas assets.
The consortium allegedly approved the increased amount without any verification or inquiry, the agency said.
After the payment, the consortium should have taken the charge on the gas and oil assets of VIL and the loan account of SCB should have been closed by VHH, it said.
Neither the consortium created the charge on oil and gas assets nor did VHHL close the loan account with SCB, it alleged.
Videocon did not inform the consortium that it was continuing to avail loan from the SCB and the lenders also did not ask for NOC from SCB about the closure, it said.
The consortium never took charge of Mozambique assets and the charge of Indonesia and Brazil was taken over in November, 2013 only from SCB, it said.
ONGC Videsh and Oil India needed no objections' from lending banks before making payments for Mozambique assets then in November 2013 VIL asked the consortium to pay outstanding of SCB London from the sale proceeds, it said.
The consortium did not object that it had already paid the outstanding of SCB in February 2013, the agency alleged.
The consortium agreed to clear the outstanding dues towards the SCB, subject to a cap of $650 million but instead ended up paying USD 704.45 million to SCB, London, from sale proceeds in connivance with bank officers, it alleged.
The agency found that VIL diverted funds of SCB, London, only spending $374 million, $554.82 million and $25.25 million on its assets in Mozambique, Indonesia and Brazil respectively as against the facility of $1616 million availed by VHHL, it said.
"The facts and circumstance prima facie show that unknown officers of lender banks led by SBI in conspiracy with Venugopal Dhoot, CMD of Videocon Industries Limited allowed VHHL, to continue to the avail the facility from SCB, London, with dishonest intention by not creating charge on Mozambique asset and thereby cause wrongful gain to Videocon and wrongful loss to Indian PSU banks," it alleged.

NCLAT rejects govt claims of $314 mn from Videocon for Ravva offshore

The National Company Law Appellate Tribunal (NCLAT) has rejected the oil ministry's plea seeking $314 million (around Rs 2,245 crore) from insolvency-bound Videocon Industries in unpaid profit petroleum from the Ravva oil and gas fields in the eastern offshore.
The ministry had on October 22 last year sent Videocon a demand notice for payment of government's share of profit petroleum, which is calculated after all capital and operating cost is deducted from the sale of oil and gas.

Videocon, which holds 25 per cent stake in Ravva oil and gas fields, had been admitted to insolvency and the resolution professional (RP) overseeing the process approached the Mumbai-bench of the National Company Law Tribunal (NCLT) against the demand saying the company cannot be asked to part with any money, including share of profit, during the moratorium period.
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NCLT upheld the RP's plea, which was challenged before the NCLAT.
A three-member NCLAT bench headed by chairperson Justice S J Mukhopadhaya also upheld the same and said that the petroleum ministry could not recover these proceeds during the moratorium period from Videocon Industries, against whom insolvency was initiated in June 2018.
"NCLT rightly held that during the period of moratorium, the Ministry of Petroleum and Natural Gas cannot recover any amount nor can issue demand notice to the corporate debtor through 'interim resolution professional' to pay any amount," said the NCLAT.
The appellate tribunal also upheld the NCLT order staying the demand note by the ministry and directing to approach the RP for recovery of the amount.
"We hold that NCLT rightly stayed demand notice dated 22nd October, 2018 during the pendency of the resolution process as long as the 'moratorium' is applicable on the corporate debtor," said the NCLAT.
As per Section 14 of the Insolvency & Bankruptcy Code (IBC), no recovery can be enforced from the corporate debtor, once the moratorium period comes into force once the insolvency is initiated by the NCLT.
The matter is related to a 'Production Sharing Contract' executed between the government and ONGC, Videocon Industries, Vedanta and Ravva Oil (Singapore) on October 28, 1994.
While state-owned ONGC had a 40 per cent participating interest, Videocon 25 per cent and Vedanta had a 22.5 per cent in the production sharing contract.
A dispute between the government and Videocon arose in 2002, which was initially referred to the International Arbitration Tribunal, which partially upheld the company's contentions.
The Government of India filed an appeal on May 10, 2005 before the High Court of Kuala Lumpur, Malaysia and Federal Court of Malaysia, where on May 16, 2016, it failed to get any relief.
Both admitted Videocon's contention that the courts had no jurisdiction to decide on the issue and award of the International Tribunal in favour of Videocon became final.
However, the petroleum ministry had on October 22, 2018 sent a demand notice to Videocon asking it to allocate USD 314 million as "government share of profit petroleum".
Following this, Videocon's RP had approached the NCLT, contending that company could not be asked to part with any money, including share of profit, during the moratorium period.
The NCLT in its order had said: "It was judicious to direct the ministry not to press for implementation of the said demand notice.

Videocon loan case: ED searches premises of Chanda, Deepak Kochhar

The Enforcement Directorate (ED) on Friday carried out an extensive search operation at the residence of Chanda Kochhar, former managing director and chief executive officer at ICICI Bank, in the Rs 3,250-crore Videocon group loan case. Business premises of her husband Deepak Kochhar and others were also searched in Mumbai and Aurangabad.
Confirming the development, an ED official said the searches were conducted in at least in five locations, including some premises of Videocon group companies. The search would continue over the weekend against the prime accused for their involvement in disbursing loans to the tune of Rs 3,250 crore to Videocon group companies, it is learnt.

The Enforcement sleuths are probing the proceeds of crime which are suspected to have been used for creating assets. A special team from Delhi, assisted by Mumbai and Aurangabad police, has collected certain crucial evidences from the location. “So far, we have seized several documents — both soft and digital copies and also hard disk and laptops —from the premises which were being searched today. We are also in possession of some of the email trails exchanged between the prime accused in the case,’’ the official added.

The ED is looking into multiple transactions including investment of Rs 64 crore in Deepak Kochhar’s NuPower Renewables through his firm Supreme Energy (SEPL).
The agency had registered a criminal case under the Prevention of Money Laundering Act (PMLA) earlier last month against Chanda Kochhar, her husband Deepak Kochhar, Videocon Industries chairman and MD, Venugopal Dhoot and others to probe alleged irregularities and corrupt practices in sanctioning of large loans by the ICICI Bank to the corporate group.
The ED had registered a money laundering case based on the first information report (FIR) of the Central Bureau of Investigation (CBI). The agency filed a case on January 22 accusing Kochhar and eight others in the matter.
The CBI report had said the accused, including Videocon Industries and Dhoot, sanctioned certain loans to private firms in a criminal conspiracy and cheated ICICI Bank to the tune of Rs 1,730 crore. The CBI had said ICICI Bank sanctioned credit facilities of Rs 3,250 crore to several firms belonging to Videocon, such as Trend Electronics and Century Appliances in violation of the Banking Regulation Act, RBI rules and the bank’s credit policy.
The Rs 3,250-crore credit amount was part of a total loan of Rs 40,000 crore sanctioned to the Videocon group by a 20-bank consortium.
The CBI probe also revealed a money trail. The loan was disbursed to Videocon International Electronics on September 7, 2009, and the next day Dhoot transferred Rs 64 crore to Kochhar’s firm Nupower through SEPL. This was the first capital received by Nupower to acquire its first power plant. This transaction showed Chanda Kochhar got “illegal gratification/undue benefits” through her husband’s firm, the agency had alleged.

ED initiates enquiry in ICICI-Videocon loan, asks Sebi for documents

The Enforcement Directorate (ED) has started an enquiry into the Rs 32.50-billion loan sanctioned to the Videocon group and others by ICICI Bank, which was part of a consortium of lenders.
According to sources, the agency has written to the Securities and Exchange Board of India (Sebi), seeking information on the Videocon group. The ED asked for details of investigation into the group’s activities in the past few years.

The enforcement agency will also approach the Reserve Bank of India for details on disclosures by ICICI Bank about its dealings with Videocon.
“A discreet probe is on and we are in the process of gathering documents,” said an ED official. Sources say the ED was examining whether there was a misappropriation of funds, discrepancies in transactions, criminal breach of trust, and violation of anti-money laundering laws or the Foreign Exchange Management Act (FEMA).
“It is premature to comment about the case and the breach of law at this point of time,” said the official cited above, and refused to give more details.
The issue concerning ICICI Bank-Videocon-NuPower Renewables came to light in 2016, when whistleblower and investor Arvind Gupta alleged a nexus between Deepak Kochhar, ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar’s husband, and Videocon group Chairman Venugopal Dhoot.
Gupta wrote to the Prime Minister, the regulators and other authorities, seeking an inquiry into the dealings related to the three entities. However, none acted on his complaint.
As part of the enquiry, the ED will record the statements of those who are under the scanner. The agency will then register the case, said another ED official.
A month ago, the Central Bureau of Investigation (CBI) registered a preliminary enquiry (PE) into the matter, concerning Deepak Kochhar, executives of the Videocon group, and others.
Sources said the PE was launched to ascertain the allegation that Dhoot gave money to a firm promoted by Deepak Kochhar and his two relatives six months after the Videocon group got Rs 32.50 billion as loan from ICICI Bank in 2012.
The amount was part of the Rs 400-billion loan the Videocon group got from a consortium of 20 banks, led by State Bank of India.
Last week, the board of directors of ICICI Bank defended Chanda Kochhar and denied allegations of favouritism while describing reports regarding credit disbursement to the Videocon group as “malicious and unfounded rumours”. The bank also said none of NuPower Renewables’ investors was a debtor to ICICI Bank.

ICICI Bank stands by Kochhar, urges not to spread rumours on Videocon loan

Reiterating its stand on the Videocon issue, ICICI Bank Chairman M.K. Sharma on Thursday said reports alleging nepotism by the lender's MD and CEO Chanda Kochhar were unfounded and malicious in nature.
Saying that ICICI Bank's exposure to the Videocon Group (Videocon Industries and 12 of its subsidiaries or associates as co-obligors) for a debt consolidation programme and for the group's oil and gas capital expenditure programme aggregating approximately Rs 400 billion was less than 10 per cent.

Sharma asserted that no individual bank employee has the ability to influence decisions of the credit committee.
"Given this architecture of sanctioning all loans by the credit committee comprising of independent directors, no individual employee, howsoever.... (higher in) position has the ability to influence the decision on credit given by the bank," Sharma said at a press conference in Mumbai.
He clarified that none of "the investors of NuPower Renewables are borrowers of ICICI Bank" and that Kochhar did not chair the committee that had lent to Videocon.
"Kochhar was a part of the credit committee which sanctioned these loan facility to the Videocon Group. The Board does not see (this) as conflict of interest in any manner since Videocon Group is not an investor in NuPower Renewables. Hence, there was no need to recuse herself from this committee," Sharma said.
"ICICI Bank was not the lead bank for this consortium and the bank only sanctioned its share of facilities aggregating approximately Rs 32.5 billion which was less than 10 per cent of the total consortium facility in April 2012."
In addition, Sharma informed at the press briefing that Kochhar has been making all her disclosures in accordance with the regulatory guidelines under the Companies Act and the Banking Act.
Sharma revealed that the bank has 'satisfactorily' replied to the questions of all the regulators, which he described as an ongoing process between "a regulated entity like a bank and the regulators and other government departments".
In 2012, a consortium of 20 banks and financial institutions sanctioned credit facilities to the Videocon Group for a debt consolidation programme and for its oil and gas capital expenditure programme aggregating to approximately Rs 400 billion.
"ICICI bank's current exposure to the Videocon Group is part of this syndicated consortium arrangement. ICICI was not the lead bank for this consortium and the bank only sanctioned its share of the facilities aggregating to approximately Rs 32.5 billion, which was less than 10 per cent of total consortium facility in April 2012," Sharma said.
The bank in a statement on Wednesday had said that: "...the Board has come to the conclusion that there is no question of any quid pro quo/nepotism/conflict of interest as is being alleged in various rumours. The Board has full confidence and reposes full faith in the Bank's MD & CEO, Chanda Kochhar."
Noting that there have been "some malicious and unfounded rumours" in the past few days casting insinuations on ICICI Bank Ltd and its MD & CEO, the bank on Wednesday had said that "similar rumours had first surfaced in mid-2016 and had been appropriately responded to".
"Nevertheless these have resurfaced in the recent past to malign the bank," it added.