An independent external legal review commissioned by HDFC Bank found no evidence to substantiate the governance or ethical concerns raised by its former chairman Atanu Chakraborty.
The bank appointed law firms in the March of this year after Chakraborty stepped down, pointing to “certain happenings and practices within the bank, that I have observed over last two years, are not in congruence with my personal Values and Ethics” as the rationale for his exit.
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The exercise looked at whether the issues referred to in Chakraborty’s statement were reflected in the record, whether he had formally noted any disagreement, and whether any such disagreement had been dealt with.
The work was carried out by Wilson Sonsini Goodrich & Rosati and Wadia Ghandy & Co.
Chakraborty called the report “a hugely caveated one and in a sense superfluous” adding that “appointing a law firm is just a compliance process.”
The external firms reviewed material from meetings of the Board and key committees, and held separate discussions with independent directors, including committee chairpersons, as well as the managing director and CEO and senior executives responsible for control and assurance functions.
HDFC Bank said the process lasted three months and included examination of thousands of documents and interviews with independent directors and several senior managers.
The Indian lender and the law firms had “repeatedly” asked Chakraborty to take part in the review, but no interview was held.
Speaking to Moneycontrol, Chakraborty said the lawyers initially approached him directly and that he had asked them to come through the Board chairman or the chair of the governance and nomination and remuneration committee.
He said he wanted clarity on “the terms of reference and the legal framework” before speaking to them.
According to the report, Chakraborty’s statement and what it suggested “were not substantiated by the record and witness interviews”.
It said the minutes of meetings he attended went through a full drafting, review and approval process that gave him a chance to place any concerns on record. It added that the material reviewed did not show contemporaneous support for his statement and that “witness interviews did not support or substantiate the statement”.
On the Dubai matter, the report said it found no contemporaneous evidence that Chakraborty had raised concerns linked to his personal values and ethics or expressed disagreement with decisions taken by the Board or the relevant committees.
Responding to this point, Chakraborty said those unfamiliar with “the local law” had “made a mistake on the Dubai matter”.
He also said, “If anybody reads the minutes, I am recorded wherever I am required to record it.”
Chakraborty further described the exercise as checking for “compliance” and called it “an exercise in futility”.
The Dubai issue relates to HDFC Bank’s dismissal of three senior executives after an internal investigation into alleged mis-selling of Credit Suisse AT-1 bonds to non-resident Indian clients through its Dubai and Bahrain branches.
In an interview with CNBC-TV18 after resigning, Chakraborty referred to conduct at the Dubai branch dating back to 2018 and questioned the bank’s description of the matter as a “technical lapse”.
Drawing attention to the delayed reaction, he commented: “Something goes on for eight years and suddenly we take an action… I feel these conduct issues should not arise in the first place.”
