Whistleblower alleges kickbacks to Kochhar brothers; ED starts probe

ED starts probe into charges; Rajiv Kochhar says all allegations are false and baseless

In what can add to the troubles of former ICICI Bank managing director and chief executive officer Chanda Kochhar, Indian and Singapore investigators have received a fresh whistle-blower letter, alleging that her brother-in-law Rajiv Kochhar and her husband, Deepak Kochhar, “were running multiple companies in Singapore, Cayman Islands and India where they used to take kickbacks from various corporate promoters for loans sanctioned by ICICI Bank”.

In the letter to Indian investigating agencies, including the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI), the Singapore-based whistle-blower has claimed that “the primary activity of the firms was that of taking advisory or consultancy fees on the loans to be arranged/restructured from the banking system, namely ICICI Bank”.

According to the letter, “the firms from where kickbacks were taken are Jaiprakash Group, Suzlon, Bhushan Power and Steel and Sterling Group etc”. 

The ED has taken up the matter and sought the loan accounts details from ICICI Bank.

In an emailed response, an ICICI bank spokesperson said, “The ED has sought information related to certain individuals/entities outside the bank. The bank always cooperates with the ED and will continue to do so in future.”

Sources said the ED was also in talks with the Singapore authorities about relevant information.

Business Standard has reviewed the content of the letter. “Even though these companies (mentioned above) were defaulting to all the banks in India, they still were paying huge amount of fees to Avista and other related entities in Singapore and Cayman Islands,” the letter said.

“Remittances received by these companies show that bank money was routed and sent to Avista Offshore for the favours granted in India by ICICI Bank,” the letter said.

The letter further said, “In a number of cases, where promoters could not remit the money through their Indian entities, they remitted the money to Avista through offshore companies either held by them or their relatives or unknown entities.”

The letter mentioned the names of at least 10 companies, including two Singapore-based ones — Avista Holding and Avista Advisory Partners. Two are Cayman-based — Hillingdon Holdings and Tortoise Shell. Others in India are Equity Capital Advisors, Credential Advisory Associates, WSV Advisors and Asian Axis Asset Advisors.

The letter highlighted the role of non-banking financial company Credential Advisory Associates, which, it alleged, was run by the brothers. It said, “[O]nce the transactions undertaken in this company are dug up, then a number of trails of kickbacks from the distressed promoter groups will emerge.”

“He (Rajiv) and his companies are in gross violation of tax evasion, routing transaction for other counter parties, violating foreign exchange management acts (FEMA), taking bribes in their entities for loans being passed in ICICI Bank against which his brother's wife Chanda Kochhar has also been indicted and are also in contravention of Permanent Establishment norms with a view to evade taxes in India and Singapore,” the letter alleged. 

In an emailed response to Business Standard, Rajiv Kochhar refuted all the allegations and said that the information “is false, baseless and the allegations and claims against me and certain companies are entirely incorrect and false”.

He added Avista Advisory Partners and Avista Holdings were in due compliance with the tax regulations and norms of Singapore and all other applicable laws. “Hence, there are no inquiries against the said companies or me in Singapore. Thus, the allegations against Avista Advisory Partners or Avista Holdings are false, baseless, malicious and I strongly deny that there is any material to even remotely suggest that there is any violation of tax evasion, routing transaction from other counter parties, and of taking bribes for loans being sanctioned by ICICI Bank.”

On floating companies along with brother Deepak Kochhar, he said this allegation was false and denied in its totality. “There are no companies floated by me along with Deepak Kochhar. We have no common business interests and do not own any companies jointly either directly or indirectly. Further, I or any of the companies mentioned by you have received any kickbacks in any of the matters mentioned by you”.

Emails and texts sent to  Deepak Kochhar, Jaiprakash group and Bhushan Steel and Power went unanswered. 

The whistle-blower letter also alleged that one of his (Rajiv) joint venture partner Houlihan Lokey (HL) , an American company was informed that the entity was making losses whereas in reality the money was being taken offshore in various entities.  The US-firm was taken for a ride with wrong disclosures being provided to them.  “The whole sham of an advisory/restructuring fees being taken by Avista was from defaulting promoters who were being given loans by the private-sector lender or for favours granted by ICICI Bank at the behest of the former CEO,” the letter claimed. 

When contacted, a Suzlon spokesperson said, “In 2014,  the company restructured its foreign convertible currency bond of $577 million with all requisite regulatory approvals from respective authorities, consortium of lenders as well as the bondholders. The FCCB bondholders representative group shortlisted and appointed leading investment bank Houlihan Lokey (HL), not Avista as the advisor. Avista Advisory Group was HL’s affiliate during that period. We wish to reiterate, it was the sole discretion of the FCCB bondholders only to shortlist, appoint and agree on the professional fee to the advisors HL, said a company spokesperson. It further said that HL and Avista were paid a professional fee for their advisory services for the FCCB restructuring in a proportion as advised by HL, as per industry standards and as agreed upon between Houlihan Lokey and representative group of FCCB bondholders. Presently, there is no fee being paid.”

Besides, the complaint also highlighted that even though the work was done by Avista through its India office, the fees from the companies were taken in Cayman or Singapore in order to evade taxes and the fraudulent certificate of No PE were furnished to tax authorities in India.

The allegations

• Brothers Rajiv and Deepak Kochhar used their companies in Singapore, Cayman Islands and India to take kickbacks from corporates for loans sanctioned by ICICI Bank
• Jaiprakash group, Suzlon, Bhushan Power and Steel, Sterling Group among firms that paid huge amount of ‘fees’ to Avista 
• Suspect firms were in gross violation of tax evasion, routing transaction for other counter parties, and violating FEMA

*From the whistle-blower's letter, dated Feb 15, to investigative agencies