Investigative overreach

Last week, the Central Bureau of Investigation (CBI) filed a case against the former managing director and chief executive officer of ICICI Bank, Chanda Kochhar; her husband, Deepak Kochhar; and the managing director of the Videocon Group, Venugopal Dhoot. The CBI says that there were illegalities in six loans totalling Rs 1,875 crore, which ICICI Bank had made to companies related to Mr Dhoot in the 2009-2011 period. The CBI further claimed that Ms Kochhar and her husband received an illegal payout of Rs 64 crore, presumably as a quid pro quo for clearing the loan. Claims of impropriety in these loans are not new, and are what led to Ms Kochhar leaving the bank last year after a much-admired career. The CBI’s First Information Report further named several well-known figures in the world of finance related in some way to ICICI Bank, including many who are still at the helm of major financial firms.

Union Minister Arun Jaitley, in a blog post written over the weekend, has accused investigators of “adventurism and megalomania”, saying that “professionalism takes a back seat” when such FIRs include “the entire who’s who of the banking industry”. Mr Jaitley’s words are well-founded — and extend beyond this particular case. The CBI’s track record is at best patchy. The agency’s case against Ms Kochhar, based at least on the information currently available, seems worryingly slender. For one, the loans to Mr Dhoot’s companies were not given by ICICI Bank alone, but by a consortium of over 20 banks, led by State Bank of India — are all those banks going to be investigated? Or is it the CBI’s contention that more than 19 banks had good reason to extend credit, but only in ICICI Bank’s case there was wrongdoing? The CBI’s mention of the other names in its FIR — including such well-known individuals as K V Kamath and Rajiv Sabharwal of Tata Capital — reflects another weakness of its claims, namely that even within ICICI Bank the decision was hardly Ms Kochhar’s alone. They were all taken by the appropriate committees, and Ms Kochhar did not even attend some of the relevant meetings. Thus, is the CBI going to have to discover criminality on the part of all the others — a grand conspiracy to lend Mr Dhoot money? ICICI Bank has, in fact, reduced its exposure within the consortium of lenders when Ms Kochhar was at the helm.

All these questions about the allegations against Ms Kochhar and the others have been known for a while, but the CBI’s FIR does nothing to answer them. Indeed, if it has taken the agency almost a year just to file an FIR, how long will the charge sheet take to file? The minister is thus right to ask if “instead of focusing primarily on the target, is a journey to nowhere (or everywhere) being undertaken?” It is entirely possible, of course, that investigations reveal that there is a case to answer against Ms and Mr Kochhar and Mr Dhoot and the others. Certainly, the transactions between Mr Dhoot and Mr Kochhar appear puzzling and raise a lot of questions. But the CBI doesn’t seem to know how to go after it in any sensible way. The confusion is already evident, with the CBI transferring the investigating officer in the case on suspicion of leaking information. As Mr Jaitley said the agency should focus only on the prime target with proper evidence. Witch-hunting can’t be an alternative.