The Story Of The Biggest Data Breach in the History of Corporate India. "Justice may be slow, but it doesn't forget. You'll pay for what you did." And if this story below is even half true - a few people are definitely going to jail. ____________________ Project Irongate: How ICICI Bank’s secret outreach campaign drew SEBI's ire - writes ( @NindakBaba Jyotindra Dubey @EconomicTimes ) @ICICIBank employees have allegedly contacted shareholders persistently to convince them to vote in favour of the delisting of ICICI Securities @ICICI_Direct . Here’s what we found after talking to some of the shareholders as well as bank employees regarding the controversial outreach programme. On June 6, markets regulator Sebi issued an administrative warning to ICICI Bank regarding its outreach programme to encourage ICICI Securities (I-Sec) shareholders to participate in the voting process for its delisting from the stock exchanges. ICICI Bank has always maintained that the shareholders outreach programme was merely to explain the demerger and delisting scheme to the shareholders of I-Sec, as it was a first-of-its-kind proposal. The outreach campaign aimed at boosting voting participation among retail shareholders. However, @SEBI_India , in its warning letter, stated that it had received several investor complaints regarding the outreach programme. Further investigation revealed that some ICICI Bank officials under the guise of the outreach programme were persistently calling I-Sec shareholders, convincing them to vote in favour of the delisting. These bank employees also insisted shareholders on sharing screenshots of their votes. SEBI further stated that these lapses are serious. It warned ICICI Bank to be careful in future and improve its compliance standards. It further directed the bank to thoroughly examine the complaints and take appropriate action against these bank officials. The bank has also been advised to present this communication and the actions taken by it with respect to all complaints received from shareholders before the board of directors and Sebi within 10 days after the next board meeting. As soon as the proposed scheme was announced by ICICI Bank, it received resistance from many retail shareholders who expressed their dissatisfaction on social media regarding the lower swap ratio and even questioned the rationale behind the delisting move. As the voting dates approached, many shareholders took to social media again, sharing instances of ICICI Bank employees contacting them to vote in favour of the proposal to delist I-Sec. @ETPrime_com ET Prime dug deeper into it and contacted several I-Sec shareholders as well as some ICICI Bank employees regarding the outreach programme. It was further gathered that ICICI Bank executed an extensive operation, internally named Project Irongate. What was Project Irongate and why did it not go well with many retail shareholders of I-Sec? Inside Project Irongate Project Irongate was a three-month-long extensive outreach programme to sway shareholders of I-Sec to support the company’s delisting. This extensive project targeted shareholders who were also the customers of ICICI Bank or ICICI Securities. Senior bank employees, from regional managers to branch heads, were given shareholder contact information. They were instructed, off the record, to contact each shareholder and encourage them to vote in favour of the delisting. ICICI Bank had also hired a professional agency specialising in shareholder outreach programmes for this project. Mumbai-based Trustwell Management Consulting and Services Ltd, a stakeholder-outreach agency, was enlisted by ICICI Bank to gather shareholder data for this project. However, instead of using the data for shareholder awareness, it was integrated with ICICI Bank’s employee data to map shareholders and influence their vote favourably. Many ICICI Bank employees who spoke with ET Prime stated that they were assigned targets and offered incentives under this project. To meet their targets, employees not only provided biased information in favour of the delisting, but also offered to vote on behalf of the shareholders, requesting confidential OTPs (one time password) to cast votes in favour of the delisting. “We were given a list of customers and asked to reach out to them to secure their confirmation of voting in favor of the proposal. Our incentives were tied to the number of confirmations we obtained. Review meetings for this project used to take place almost on a daily basis. Many of us worked even on weekends to reach the target,” an ICICI Bank employee, who requested anonymity, told ET Prime. Several I-sec shareholders have posted screenshots of WhatsApp message and call recordings on social media showing ICICI Bank employees’ attempt to influence their votes. “We would like to categorically state that your information about ICICI Bank employees being offered incentives is completely incorrect and baseless,” an ICICI Bank spokesperson told ET Prime. The spokesperson also referred to the bank’s response to stock exchanges regarding the shareholders outreach programme which stated, “The outreach programme was an effort to reach out to equity shareholders with a view to explain to them the proposed scheme and the e-voting process with the primary objective of maximising participation in the vote.” “There is overlap between the categories of shareholders and customers across both entities. The approach in the outreach was to explain the proposed scheme and facilitate voting, and to not pursue repeated engagement if declined by the shareholder,” it added. E-mail queries sent to Trustwell Management Consulting and Services did not elicit any response. Specific queries sent to ICICI Bank regarding Project Irongate and the role of the aforementioned agency in this project remained unanswered. SEBI's observations Sebi in its warning letter said, “Your bank (ICICI Bank) has submitted that the outreach programme was undertaken merely to explain the scheme and for maximising shareholders’ participation, however based on the examination of the investor complaints, it was observed that some of the officials of your bank have gone beyond the outreach programme by making repeated calls, asking for screenshots of voting etc. Further, from one of the call recordings shared, it was observed that the shareholder of I-Sec was informed by your bank officials that opting for the scheme would be beneficial, which was clearly beyond an outreach programme.” SEBI noted that the bank, being a promoter/interested party, offering its perspective on the proposed transaction to shareholders of I-Sec cannot be considered providing a balanced factual position. “There was a clear conflict of interest as your bank is the promoter with more than 74% shareholding in I-Sec and an interested party in the transaction,” said the Sebi warning letter. Furthermore, SEBI highlighted that the heightened outreach programme on the final day of voting, citing holidays/weekend, seemed inappropriate. It also refuted ICICI Bank’s submission that stated that some shareholders were not aware of the e-voting process and were therefore contacted for assistance. SEBI observed that the entire e-voting process was already thoroughly explained in the explanatory statement accompanying the notice to the shareholders, along with the dedicated helpline numbers of NSDL and CDSL. Additionally, a dedicated e-mail id to resolve any technical issues was provided in the aforesaid explanatory statement. Therefore, bank officials asking for a screenshot from the shareholders was inappropriate. “SEBI has rightfully and graciously given a strong message to both ICICI Bank and I-Sec via a mellowed warning. But the fact remains that their action has already led to colossal losses for minority shareholders over the last 12 months,” Manu Rishi Gupta, a minority shareholder of I-sec, told ET Prime. Gupta runs portfolio management services under the name MRG Capital and is emerging as an activist investor, having raised governance issues in listed companies such as ITC, along with leading a class action suit against ICICI Bank on this matter. “ICICI Bank might say that this outreach was only for educational purposes, its pertinent to ask a question – when before in the history of corporate India has such outreach program happened? How many times has ICICI Bank previously done the same?” he added. On March 27, 2024, the minority shareholders voted in favour of delisting ICICI Securities, thereby making it a wholly owned subsidiary of ICICI Bank. However, there was clear resistance from retail investors; the institutional shareholders voted in favour of the proposal. While 83.8% of institutional shareholders voted in favour of the proposal, the majority of retail shareholders (67.8%) opposed it. A bunch of retail shareholders have filed a class-action lawsuit against the company’s delisting and merger plan with ICICI Bank. Beyond concerns about the depressed valuation and share-swap ratio, they also alleged that ICICI Bank tried manipulating shareholders under misleading outreach campaigns aimed at securing support for the delisting. The matter is pending before NCLT. ______ My Take This is a clear case of obstruction of the freewill of the shareholders. And ICICI Bank knew that this voting for delisting will fail and that's why this sort of Booth Capturing was undertaken. Why else was the entire machinery of the Bank activated on a long weekend, the first time in the history, and that too only for educational purposes? I am curious to know how all these employees of the Bank will respond if they are asked to declare the truth under oath.? I am also curious to know, who in the ICICI Securities Board / Senior Management will be held terminally responsible for the biggest data breach in the history of Indian Banking? economictimes.indiatimes.com…