'Wasn’t timing beneficial to Buch?': Congress fires fresh salvo against Madhabi Puri Buch, accuses ICICI Bank of hiding facts

The Congress party has intensified its criticism of ICICI Bank over the ongoing controversy surrounding Madhabi Puri Buch, the current Chairperson of the Securities and Exchange Board of India (SEBI). In a scathing statement, Congress leader Pawan Khera accused the bank of providing explanations that, instead of dispelling concerns, have only added credence to the allegations.

Inconsistent Retiral Benefits Raise Questions

Khera questioned the irregularities in the retiral benefits received by Buch, noting that while ICICI Bank claims these payments were accrued benefits, their frequency and amounts do not align with standard practices. "How can a 'retiral benefit' exceed the salary earned during employment?" Khera asked, pointing out that Buch’s average retiral benefit from 2016-17 to 2020-21 was nearly double her average salary during her tenure at ICICI Bank from 2007 to 2013-14.

Unexplained ESOP Policy Discrepancies

The Congress party also took issue with ICICI Bank's explanation regarding the exercise of Employee Stock Options (ESOPs) by Buch. Khera highlighted a significant discrepancy between the bank's statement and its publicly disclosed ESOP policy, which is available on the U.S. Securities Exchange Commission (SEC) website. According to the disclosed policy, former employees must exercise their ESOPs within three months of voluntary termination, whereas the bank claims that Buch was allowed to exercise her ESOPs up to 10 years after vesting.

Khera demanded that ICICI Bank provide documentation of this "revised policy" and questioned why it has not been made publicly available. He also raised concerns about the timing of Buch’s exercise of ESOPs, which coincided with a substantial increase in the company’s share price. "Wasn’t this timing beneficial to her?" Khera asked.

The Congress statement further added: "Why was Ms. Madhabi P. Buch allowed to exercise ESOPs at a time when the share price of this company increased substantially thereby benefitting her. And strangely this benefit that accrued to her coincided with her tenure at SEBI. Wasn't the market price beneficial to her? Were the ESOPs given to Ms. Madhabi P. Buch sourced from the Employees' ESOPs Trust. If so, isn't this prejudicial to the interests of other employees of ICICI?"
 

Tax Compliance and Ethical Concerns

Further scrutiny was directed at the bank’s handling of tax deductions on Buch’s ESOPs. Khera questioned why ICICI Bank paid the tax deduction at source (TDS) on Buch’s behalf and whether this practice is uniformly applied to all employees. He also raised doubts about whether the TDS amount was reported as taxable income by Buch, hinting at possible non-compliance with the Income Tax Act.

Broader Allegations and Calls for Resignation

Buch has been embroiled in controversy since U.S. short-seller Hindenburg Research accused her of a potential conflict of interest in SEBI’s ongoing investigation into the Adani Group. Yesterday, the Congress fied a fresh salvo against her by alleging that she violated Section 54 of SEBI by drawing a salary from ICICI Bank while serving as a full-time member of SEBI.

Khera reiterated these allegations, pointing out that Buch was a whole-time member of SEBI from April 2017 to October 2021 and continued receiving payments from ICICI Bank during this period. "Why was she taking a salary from ICICI Bank despite being a full-time member of SEBI?" Khera asked, underscoring the party’s demand for transparency and accountability.

ICICI Bank's Response

In response to the allegations, ICICI Bank yesterday issued a statement denying any wrongdoing. The bank clarified that it did not pay Buch any salary or grant her any ESOPs after her retirement, aside from her retiral benefits. The bank also stated that Buch’s ESOPs were granted and vested according to rules that allowed employees, including retirees, to exercise their options up to 10 years from the vesting date.

The bank further explained that under Income Tax rules, the difference between the stock’s market price on the day of ESOP exercise and the allotment price is treated as perquisite income, and TDS is accordingly deducted.