BharatPe has fired Madhuri Jain Grover, the company’s head of controls, on charges of 'misappropriation of funds,' sources confirmed to The Economic Times. She subsequently went on a Twitter tirade, calling the move a "perfectly executed witch hunt."
Meanwhile, her husband, BharatPe co-founder and managing director Ashneer Grover, reportedly filed an arbitration plea with the Singapore International Arbitration Centre (SIAC).
He claims that the company’s preliminary investigation against him was in violation of shareholder agreement and articles of association, and is therefore invalid, Mint reported.
Grover seeks indemnity from any future action against him in his ongoing settlement discussions with BharatPe and its shareholders, so that he can't be sued after this matter is settled, ET reported.
'Perfectly Executed Witch Hunt': Madhuri Reacts to Her Sacking on Twitter
Madhuri Jain, who was in charge of finances at the $3 billion fintech company, on Wednesday wrote a series of tweets against the top management and stakeholders of BharatPe, post her reported firing.
She accused CEO Suhail Sameer and co-founders Bhavik Koladiya and Shashvat Nakrani of indulging in "drunken orgies" and treating women like objects.
"Drink and smoke in office and burn the place down! For you have no pain for what Ashneer Grover built single handedly and you snatched !!"Madhuri Jain on Twitter
"Great work by Sequoia and Harshjit Sethi and Chairman Rajnish Kumar for a perfectly executed witch hunt with your accomplices Sumeet Singh and BhavikKoladiya," she added.
"At least you could have let me prepare my kid for exam rather than call for sham conversation with these agents. 10/10 for confidentiality!" she wrote, receiving flak from several Twitter users who said she was playing "the woman card."
'Grover Should Have Shown Maturity': BharatPe Chairman
BharatPe Board Chairman Rajnish Kumar on Wednesday said company Ashneer Grover should have shown more maturity, referring to his handling of the entire affair.
“I agree that Ashneer should have shown maturity… The whole strategy of Ashneer is to make out a case that Governance review is biased against him. He is creating documentation for that, nothing else,”Rajnish Kumar to Moneycontrol
Grover on Tuesday sent a letter to the board of Resilient Innovations, BharatPe's parent company, alleging that co-founder Bhavik Koladiya called him and asked to meet at a location without sharing an agenda, according to the publication.
Rajnish Kumar was also with him when the call came, he said.
He reportedly accused Kumar of being biased and prejudiced, and Koladiya of being abusive, adding that he reserves the right to take appropriate legal action.
Ashneer's Termination, Share Buyback on the Cards
The board of BharatPe is "setting the stage" for terminating Ashneer Grover 's employment and buying back certain restricted shares, according to The Indian Express. Shares will also reportedly be bought back from his wife.
Restricted shares are special shares given to a company's management or employees that cannot be traded until certain conditions, such as a vesting period, have been met. They are an effective way to retain employees.
BharatPe will mostly likely leverage provisions in the company’s Articles of Association (AoA) to buy back certain restricted shares held by Grover at less than fair market value (FMV), sources told the publication.
AoA is a sort of rule book that defines the company's purpose, and lays down regulations for how it will be managed. In BharatPe's case, it reportedly allows the company to buy back a founder’s restricted shares if they have been terminated for “cause”.
Grover owns 9.5 percent stake in BharatPe. The AoA reportedly defines restricted shares as 75 percent of the shares held by founders on 5 September 2019 (end of the Series C fundraising round), and follow-on shares issued at the closing of Series E funding round.
PwC was hired by BharatPe in January to investigate deeper into aspects, such as accounting, approval processes, expenses, and hiring, building on the preliminary probe, the publication reported.
'Recruitment Fraud, Payments to Fictitious Vendors'
BharatPe's board has now reportedly appointed PwC (PricewaterhouseCoopers), one of the 'big four' accounting and audit firms, to investigate further into aspects such as accounting, approval processes, expenses, and hiring.
Earlier, Alvarez and Marsal, a management consultant and risk advisory firm, was roped in to conduct the preliminary audit in which two instances of alleged fraud were uncovered – irregularities in recruitment and payment to non-existent vendors, Mint reported.
After reviewing invoices, it was found that the company was recruiting staff, then paying a network of HR consultants that had nothing to do with the hiring, according to the report. The firms appeared to be linked to each other, as well as to Madhuri Jain Grover, and were all reportedly based in Panipat, where she is originally from.
In multiple instances, Madhuri 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 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, appears to have handled this matter.
Audio Clip Leak
Grover and his wife both went on leave, after an audio clip went viral in which he allegedly threatened and hurled abuses at a Kotak Mahindra Bank employee for failing to secure shares during Nykaa's IPO.
Grover initially called it a "fake audio by some scamster trying to extort funds," but later deleted his tweet. The bank said that it was exploring legal action against him for using inappropriate language against its staff.
The controversy has put a spotlight on BharatPe and its troubled history.
Grover has roped in New Delhi-based law firm Karanjawala & Co to safeguard his position in the company amid mounting pressure on him to quit permanently, sources told The Economic Times.
(With inputs from The Indian Express, Mint, Moneycontrol, and The Economic Times.)
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