An independent probe into BharatPe has brought to light two instances of fraud at the $3 billion merchant-focused fintech startup, according to Mint.
Alvarez and Marsal, a management consultant and risk advisory firm, was roped in to conduct an audit of BharatPe's internal processes and systems after controversy erupted over co-founder Ashneer Grover allegedly using inappropriate language to a Kotak Mahindra Bank's employee.
The publication had initially reported that the board of BharatPe has decided to terminate the services of Ashneer Grover based on this investigation, but the company has denied this.
Recruitment Fraud, Payments to Fictitious Vendors
The allegations are on two major grounds. One is the irregularities in recruitment and second revolves around paying non-existent vendors, Mint reports.
Alvarez and Marsal, after reviewing invoices, found that the company was recruiting staff but paying a network of HR consultants that had nothing to do with the hiring, and appear to be linked to each other as well as to Madhuri Grover, according to the publication. These firms were all reportedly based in Panipat where she is originally from.
In multiple instances Madhuri Grover appeared to have directly received the invoices created by her brother Shwetank Jain, which she forwarded to the accounts team for payment.
The investigation also found that nearly Rs 51 crore was paid to 30 vendors who appeared to be fictitious.
When these payments were caught by the Directorate General of GST Intelligence (DGGI), the company didn't contest, but instead paid close to Rs 11 crore in dues along with penalties, the report says.
Deepak Jagdishram Gupta, who is responsible for procurements at the company and is Madhuri’s brother-in-law, seems to have handled this matter.
Alvarez and Marsal has now reportedly asked the board to clear a deeper investigation as to why the company was dealing with non-existent vendors.
Grover Lawyers Up
Grover has roped in New Delhi-based law firm Karanjawala & Co to safeguard his position at the company amid mounting pressure on him to quit permanently, sources told The Economic Times.
He took voluntary leave till March-end, the company said, days after an audio clip went viral in which he allegedly threatened and hurled abuses at a Kotak Mahindra Bank employee.
Grover initially called it a “fake audio by some scamster trying to extort funds," but later deleted his tweet. The controversy has put a spotlight on BharatPe and its troubled history.
He and his wife sent a legal notice to Kotak Mahindra Bank's Managing Director and Chief Executive Officer, Uday Kotak, accusing the bank of failing to secure financing and allocation of shares in an IPO launched by beauty firm Nykaa.
Kotak Mahindra Bank had said: "This notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Grover."
(With inputs from The Economic Times and Mint)
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