Ministry of Corporate Affairs to probe BharatPe saga

The central government has decided to conduct a preliminary inquiry into alleged corporate governance lapses at fintech unicorn BharatPe.

A government official told Business Today TV that the preliminary probe, to be conducted by the Ministry of Corporate Affairs (MCA), will be in the nature of a fact-finding exercise as of now. 

"The MCA has the power to call for information, inspect books and conduct inquiries in issues that involve shareholder and investor interest", the source added. The probe will take into account the findings of recent audit reports conducted at the behest of the BharatPe board.

The BharatPe saga started with a leaked audio clip allegedly featuring Ashneer Grover, the co-founder and managing director of the company, hurling abuses at a Kotak Mahindra Bank employee for not getting them a preferred share allotment in Nykaa's initial public offering. Grover responded to the leak with a legal notice, inviting a counter from the bank. Around the same time, the details of an earlier bust-up with the company's largest shareholder - Sequoia India - emerged, adding to Grover's public relations disaster.

Around the same time, the BharatPe board appointed management consultant and risk advisory firm Alvarez and Marsal (A&M) and accounting firm PwC to conduct independent audits to probe alleged funds misappropriation and corporate governance issues under Grover.

A preliminary report by A&M found inconsistencies with recruitment and fake invoices, allegedly involving Grover's wife Madhuri Jain, her brother Shwetank Jain and brother-in-law Deepak Jagdishram Gupta. The investigation has reportedly found five instances of employees recruited through various consultants who were paid recruitment fees, although the employees denied being hired through the consultants mentioned in the invoice. 

As per the report, in three of these cases, Jain had directly received invoices from vendors and sent them to the account departments for clearance. Payments were also allegedly made to non-existent vendors.

Grover, who had moved the Singapore International Arbitration Centre seeking to ward off a board investigation, subsequently resigned, alleging that he had been "baselessly targeted by a few individuals" and "vilified and treated in the most disgraceful manner." 

The fintech company responded by saying that it reserves the right to take action based on the report findings. 

"Ashneer Grover resigned as Managing Director and Board Director of BharatPe minutes after receiving the agenda for upcoming Board meeting that included submission of the PwC report regarding his conduct and considering actions based on it".

Also Read: BharatPe removes all mentions of Ashneer Grover from its website

Also Read: Did Ashneer Grover not co-found BharatPe?