Didn’t pay salary or granted ESOPs post-retirement to Sebi’s Madhabi Puri Buch: ICICI Bank amid Congress’ allegations

Private lender ICICI Bank on Monday denied paying salary or granting stock options to Sebi chair and former bank employee Madhabi Puri Buch, hours after Indian National Congress spokesperson Pawan Khera alleged Buch received ₹16.8 crore from the group between FY18 and FY24.

“ICICI Bank or its group companies have not paid any salary or granted any Esops (employee stock ownership plan) to Madhabi Puri Buch after her retirement, other than her retiral benefits. It may be noted that she had opted for superannuation with effect from 31 October 2013,” the bank said in a regulatory filing.

During her employment with the ICICI Group, the statement said, she received compensation in the form of salary, retiral benefits, bonus and Esops, in line with applicable policies.

“Under the Bank’s ESOP rules, the ESOPs vest over the next few years from the date of allotment. As per rules existing at the time of her ESOP grant, employees including retired employees had the choice to exercise their ESOPs anytime up to a period of 10 years from the date of vesting,” it said, adding that all payments made to Buch post her retirement had accrued to her during her employment phase with the ICICI Group.

“These payments comprise ESOPs and retiral benefits.”

An email sent to the Sebi spokesperson remained unanswered till press time.

In a press conference on Monday, Khera alleged that Buch drew over ₹12 crore in salary from ICICI Bank between 2017-18 and 2023-24. Khera also alleged that during the same period Buch received an income from “ICICI Prudential” of over ₹22 lakh; income from employee stock ownership plan exercise of ₹2.8 crore for FY22 and FY23; and TDS on the Esop for FY22 and FY23 of over ₹1 crore.

Khera alleged that Buch had violated the employee service regulations, code on conflict of interests for board members, and ICICI employees stock option scheme.

The allegations against Buch come within a month of US short-seller Hindenburg Research alleging that the Securities and Exchange Board of India’s investigations into its January 2023 report of an accounting fraud and manipulation of shares by the Adani Group was compromised.

Hindenburg said this was because of Buch’s stake in offshore entities that the Adani Group had allegedly used to siphon money, apart from impropriety and potential conflict of interest rising from her ownership of the consulting firms. Buch and Adani Group have rejected the allegations repeatedly.

On Monday, Subhash Chandra, chairman emeritus of Zee group, which has been under the Sebi's scanner, said he will stop cooperating with the regulator. Addressing a press conference in Mumbai, Chandra also said that he is exploring legal action against the Sebi chairperson.

Buch's current three-year tenure as chair ends in March next year.

Khera also alleged multiple conflicts of interest involving the chairperson, including the Supreme Court-monitored investigation into the allegations made by Hindenburg against Adani.

A corporate governance expert who spoke on the condition of anonymity said, “Even if the Esops were retiral benefits, there should have been public disclosure.”

To be clear, Buch joined ICICI bank in 1989 in the project finance department. She left ICICI in 1992 and worked in ANZ Grindlays Bank and ORG MARG Research before joining ICICI again in January 1997 in the planning and treasury department.

When asked if it is appropriate for a Sebi chairperson to receive Esops from a former employer, securities lawyer Chirag M Shah said that Esops were granted after approval of the general body of the employer and vest at a point in time in future when the employee pays for the options. After this, it becomes an absolute property of the person and is no longer linked to employment.

“Even if one leaves the job, the shares can remain in their portfolio. Disclosure of such and other investments is made routinely by such senior level appointees as mandated under law. Conflict is decided by an internal Committee of the Board and cannot be a subject matter of wild accusations and conspiracy theories,” Shah said.

Sumit Agrawal, partner, Regstreet Law Advisors and former Sebi official, said that at first glance this situation appeared to be highly implausible.

"The notion of deferred wages, along with other financial elements like perquisites, income from salary, Esops, and dividends, involves a range of distinct concepts governed by various legal frameworks. Each of these financial components is regulated by different laws and regulations, such as tax laws and other relevant legislation requiring different aspects such as disclosures,” he said.

(Varun Sood contributed to the story)