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This article was first published 5 years ago  » Business » Chanda Kochhar falls on her sword, but why now?

Chanda Kochhar falls on her sword, but why now?

By S Muralidharan
Last updated on: October 09, 2018 09:39 IST
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Make no mistake, legally Chanda Kochhar was not and still is not obliged to quit.
But quitting earlier would have placed her personally and as a leader on a very high pedestal, indeed where she belonged until this lapse, says S Muralidharan, former managing director, BNP Paribas.
Illustration: Dominic Xavier/

The Great Corporate Suspense is over: The swashbuckling Female Flynn (Erroll, not Gen Michael) who once scythed through the Indian banking scene like a modern-day Maid of Orleans has finally fallen on her sword.

Not an entirely unexpected end to a glittering banking career which will come to be remembered for this sordid saga rather than for the great heights it achieved and the prejudices it overcame.

No substantial new facts have come to light since I last commented on it for her to take this step now.

An inquiry commission has been constituted and is presumably going about its work diligently. As commissions of inquiries are wont to, this one too will sit for long and after much moaning and groaning drop the matter with a big report.

The 'matter' is likely to be just as useful and malodorous as its scatological cousin. It will probably not find any wrong-doing on her part but spread the blame around for 'systemic failures'.

Everyone will be held responsible, no one accountable.

She weathered the non-stop 24x7 electronic media hyperventilation and all manner of speculative articles in the print and online media.

The media attention has since waned into insignificance, distracted by exploding bad loans, truant tycoons, and petulant politics.

She had effectively seen the spotlight of attention shift focus to other things by merely gritting her teeth and maintaining a dignified silence.


So why did she fall on her sword now?

Why not earlier or why not brazen it out some more and await the investigation reports?

Although she doesn't need the pay cheque, a complete vindication would be nice.

I have been of the opinion that she should not only have been above suspicion, but seen to have been above suspicion.

Clearly that has not been the case here. Bad odour in your neighbourhood has a habit of clinging to what you are wearing.

Her husband's financial shenanigans are clinging to her now. The board with its ham-handed attempt to exonerate her (and thus itself) did not help matters.

But legally she was well within her rights not to have to fall on her sword, for there have only been innuendos and allegations of quid pro quo, as far as she is concerned.

Where her husband is concerned, there was a lot of quids, that much is known.

As far as she is concerned, it seems to be correlation than causation. At any rate, none in the public domain.

Being married to someone with a faulty moral compass is not a crime. So what has changed for her to do this now?

The pressures of adverse media attention could not have been easy to manage. In these days of 24x7 television coverage and freedom of expression courtesy social media and unquestioning, ubiquitous, and ovine 'forwards' of asinine comments, it is easy to metaphorically tar and feather anyone and hang their shredded reputation out to dry.

Just imagine the impact of this on one's image in the eyes of self, family, and circle of friends and acquaintances.

She must have been walking around like a zombie the last few months. But that pressure has eased significantly as the media looks elsewhere for newer, juicier, and hotter issues much like a compulsive womaniser seeks his next conquest, or a serial killer his next victim.

Perhaps the pressure got to her finally, despite her abilities at handling pressures.

Some have suggested -- uncharitably, I thought initially -- that she was hanging on in order to have some clarity on the fate of her stock options which are reportedly substantial.

In their statement accepting her resignation the board made a cryptic reference to her 'retirement benefits'. In the world of stock options the benefits can be withheld or denied altogether under certain circumstances.

Having been stung by the public criticism of its hasty clean chit to Ms Kochhar when the scandal first surfaced, the board must have decided to play safe and not commit to protecting her benefits.

Not until the enquiry commission publicly cleared her, anyway.

This line of argument suggests that with the board unable to reassure her on the options, she saw no point in hanging around doing nothing, thus prolonging her agony.

After having dwelt at length on this suggestion, my initial conviction as to its lack of charity is considerably weaker now.

I said so earlier and will do so again: It is unlikely that Ms Kochhar will be found guilty of knowingly favouring a business group for a quid pro quo.

But certain events did happen: A business group was given loans; an investment was made in her husband's firm by that group; the investment was effectively written off by the investor; and the transactions were made so devious so as to cover someone's tracks.

While one or more parties knew the precise intent behind these acts (because they designed it as such?), I doubt if Ms Kochhar was complicit.

But at a certain point she had been made aware by her husband that one of her clients had invested in his business.

Did she advise the board immediately?

Did she tell (order?) her husband to back off from the transaction?

Did she keep herself abreast of the locus of that investment (had she done so, she might have found out at some point that it had indeed crossed a red line) or did she turn a blind eye to it?

Legality is one thing. Ethicality is something else.

Notwithstanding the attempts of a 'rockstar' justice of the Supreme Court to paint it as such, our society is not one just of Law and Liberty; it has been for millennia defined by morals, or 'dharma' if you will, and thank god for that.

There can be plenty of Law but very little Justice as is often said about the USA. Law can only tell you what you cannot do, not what you should.

Law only goes so far; morality goes much further, even beyond one's grave.

Where the law stops, as at the frontiers of science, it is one's own moral compass that must decide if one should go forward.

When the father of the atomic bomb J Robert Oppenheimer, realising what he had done, spoke against developing further bombs, his amoral colleague Edward Teller went on to design and build something far more destructive.

Despite being humiliated, investigated and consigned to oblivion for this stand, Oppenheimer is better known, far better than is Teller.

Law is about getting caught. If you are not caught, for whatever reason, then you are not guilty.

Not getting caught can be as much the result of prosecutorial incompetence or misconduct, or systematic subversion of justice by the accused, as it could be about actual innocence.

In our own backyard, we know only too well how the CBI can be expertly incompetent when they choose, our police is incapable of proving guilt and how the law enforcement can act so as to get a case tossed out by the courts.

Law is often shaped by money and power so as to perpetuate the reign of those who have them.

Most analysts and commentators agree that the financial crisis of 2008 was caused by bankers acting within the law but not ethically -- why break the laws if you can have them changed?

Often the movers and shakers tend to conflate acting within the law with acting ethically, especially in the financial community.

Lest it be misunderstood, you can act lawfully and still be unethical.

Legality is a matter of facts, laws, and compliance; ethicality is about making judgements, often in very difficult circumstances.

Her situation in my view was much like the trolley problem in ethics.

For those unfamiliar with this problem, it poses the question, what would you do when you are in a position to save a few lives by diverting a runaway trolley knowing that such a diversion would certainly claim a different life?

What should you do?

Without getting into the details, suffice to say that simply doing nothing is not a good choice as it would cost a number of lives when you had the power to save those lives.

Ms Kochhar cannot justify doing nothing when she became aware of her husband's business deal. She was in a position to have stopped the train wreck when she became aware of the deal, but she didn't

Such a position is not legally untenable, merely morally reprehensible.

Laws are based on the past; they look back and make provisions to prevent the past misdeeds from recurring.

Being 'legal' is about the letter, but not the spirit.

While it seeks to protect against history repeating itself, laws do nothing to stop history mutating and recurring in a slightly different form.

New laws will be needed to prevent that happening again and so on and so forth, ad nauseum.

Placing all of one's faith in the law is like driving your car forwards while looking backwards.

Law does not enable us to drive forward in the face of unforeseen and unknown hazards. We need a strong moral compass to do that.

This diatribe on the law is not an idle essay into jurisprudence and ethics. In our present instance, while Ms Kochhar may have acted legally, did she act ethically? That I would suggest is the core question Justice B N Srikrishna should address.

My own take is that she did not seem to possess an ethical judgement as finely calibrated as her financial one -- or that it failed her in this instance.

I am not saying she actively colluded in anything improper. By not taking a firm stand against her husband's association with her bank's clients, she appeared to have done nothing to prevent the 'improper' happening.

Then the 'improper' happened.

She stood by as the trolley barrelled down and mowed down five people.

She might like to take solace in the argument that she did not participate; I would argue that while she did not murder those in the path of the trolley, her act of non-participation in itself constitutes an act that had a tragic consequences.

When all hell broke loose around her, and quitting that poisonous atmosphere would have been the wisest thing to do, she chose to carry on. Brave, but not wise.

The line between bravery and foolhardiness is a very thin one. This to me is further proof of impaired judgement that could not tell between what was legal and what was right.

Make no mistake, legally she was not and still is not obliged to quit.

But quitting earlier would have placed her personally and as a leader on a very high pedestal, indeed where she belonged until this lapse.

Caesar's wife must be seen to be above suspicion and not merely be Not Guilty.

S Muralidharan retired as managing director, BNP Paribas, after serving the bank for 20 years.

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