The boardroom drama over the reigns of fintech major BharatPe shows no signs of abating. In the latest turn of events, Madhuri Jain, the company’s controller and Ashneer Grover’s, cofounder and managing director of BharatPe, wife, on charges of misappropriating funds. Jain had been in charge of BharatPe’s finances since October 2018, was sacked from BharatPe on February 23.
Meanwhile, Kumar responded to Grover’s allegations, saying they would have “no impact” on his reputation or the company’s. “Ashneer is being immature. There will be no impact of this on the company or myself. Everyone knows my credibility and these comments won’t change that,” he said.
What is the BharatPe Saga All About?
On January 19, Grover, took voluntary leave until the end of March. The voluntary leave came two weeks after after a recording of a phone conversation was leaked online in which a man, alleged to be Grover, could be heard abusing and threatening an employee of Kotak Mahindra Bank after missing out on the IPO allotment for Nykaa’s initial public offering despite being promised one. While Ashneer first termed it as a “fake audio by some scamster trying to extort funds, he later deleted the tweet. Kotak Mahindra Bank is now pursuing legal action against Ashneer over “inappropriate language” used against their employee. The bank had acknowledged that Grover and his wife had in October sent a legal notice to it, without elaborating on the reasons for the same.
Further, on January 29, Madhuri Grover, who works as the Head of Controls in BharatPe, went on voluntary leave. On the same day, BharatPe appointed Alvarez and Marsal (A&M), for internal audit at the board’s recommendation.
Reports emerged citing sources that BharatPe is likely to terminate Ashneer Grover. BharatPe issued a public statement that no employee has been terminated.
Financial Irregularities Flagged
A preliminary report by international consulting firm Alvarez and Marsal (A&M) which had been appointed to look into allegations of financial fraud has indicated that there were indeed financial discrepancies.
The report said that the fintech firm was said to be paying recruitment fees to a number of ‘consultants’ for the employees recruited through them. In five such cases, employees have confirmed their joining date as the one mentioned in the vendor invoice but they had no knowledge of being recruited or engaged through the said ‘consultants.’
Further, in three out of those five instances, Madhuri Jain Grover is said to have directly received the invoices from the vendors and forwarded them to the accounts team for payment, according to the report. On further examination of these invoices, the consulting firm found that the creator of all these invoices originated from Shwetank Jain, who has been identified as Madhuri Grover’s brother.
Madhuri’s letter to Alvarez & Marsal
On February 10, Madhuri, controller at BharatPe, writes to Alvarez & Marsal (A&M), questioning the consulting firm about recent media leaks. Her letter also questions the manner in which a probe into alleged irregularities at the fintech firm is being conducted.
Jain’s letter said that she was considering legal action against the firm, and has demanded an internal investigation on how the contents of the probe undertaken by A&M were allegedly ‘leaked’.
Suhail Sameer’s Letter to Employees
In an attempt to address the concerns of the the staff of the fintech firm, BharatPe’s chief executive Suhail Sameer has written a letter to its employees on Friday morning saying the company is “under constant scrutiny and spotlight” and “what is being written is nothing but unsubstantiated rumours”. He said that they have decided to do a full audit of the governance processes based on some internal complaints.
Sameer also called for employee trust, as the corporate battle between BharatPe’s board and cofounder Ashneer Grover had left the staff with a sense of ‘uncertainty’ on the future prospects of the company.
The Power Tussle
In a dramatic escalation of hostilities, on February 22, Grover sought protection from any future action against him as part of his settlement. He also filed an arbitration plea in Singapore, looking to protect his 9.5 per cent stake in the company. Grover also wrote to the board, informing it of an alleged expletive-laden communication between himself and group product head Bhavik Koladiya that took place in the presence of board chairman Rajnish Kumar, who is a former chairman of SBI.
Ashneer Grover Stake Sale in BharatPe
Key investors at BharatPe have turned down an offer made by co-founder Ashneer Grover to sell his stake in the fintech start-up for over Rs 4,000 crore if they want him to quit the company, Business Standard reported.
Grover, who owns around 9.5 per cent of shares in BharatPe, had reportedly asked the board to buy out his shareholding for Rs 4,000 crore in cash. Grover is also exploring options with external investors to buy out his stake, according to multiple news reports. The sale discussions initiated by Grover came on the back of the ongoing investigation and an independent audit of BharatPe, which has indicated financial irregularities at the startup.
BharatPe Fight Spills Over to Singapore
Even as BharatPe co-founder Ashneer Grover has filed an emergency plea before the Singapore International Arbitration Centre (SIAC) seeking to quash the company’s investigation into an alleged financial fraud and mishandling of company funds, the two parties are understood to be moving closer to an out-of-court settlement. Grover has asked indemnity for many future liabilities while selling his stake back to the company.
In his pleas before the SIAC, Grover said the “review committee” formed by the BharatPe board earlier this month, to look into the allegations of financial fraud, was violative of the terms approved under the shareholder’s agreement (SHA).
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