Fintech platform BharatPe removed Ashneer Grover from all positions in the company on Wednesday (March 2). In a statement, the company accused Grover’s family and relatives of engaging in extensive misappropriation of company funds. It also said that it reserved the right to take further legal action against Grover and his family.
Why has BharatPe stripped Ashneer Grover of co-founder status?
BharatPe has alleged that the Grover family and their relatives “engaged in extensive misappropriation of company funds, including, but not limited to, creating fake vendors through which they siphoned money away from the company’s expense account and grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles”.
Therefore, “As a result of his misdeeds, Mr Grover is no longer an employee, a founder, or a director of the company,” BharatPe said.
How has Ashneer Grover responded to these allegations?
In response to a query over the company’s allegations, Grover told The Indian Express: “I am appalled at the personal nature of the company’s statement, but not surprised. It comes from a position of personal hatred and low thinking. I think the Board needs to be reminded of $1 million of secondary shares investors bought from me in Series C, $2.5 million in Series D, and $8.5 million in Series E.
“I would also want to learn who among Amarchand, PWC and A&M has started doing audit on the ‘lavishness’ of one’s lifestyle? The only thing lavish about me is my dreams and ability to achieve them against all odds through hard work and enterprise,” he said.
On Tuesday, Grover had written to BharatPe’s board of directors resigning from his position as managing director and a board member of the company.
In his mail, Grover had alleged that the BharatPe board had “ousted” him for their “vested interests”, and added that the recent developments related to the company seem to be a “battle of egos being played to the gallery of the media under the charade of ‘good governance’”.
Grover also alleged the “investor template” to make an “unwanted” founder go away, is to make the founder “the villain of the piece”.
What is the basis of BharatPe’s allegations?
In a board meeting held late on Tuesday, BharatPe’s board considered a report submitted by PwC into governance practices at the company, including Ashneer Grover’s conduct. PwC was given the job in late January following complaints of misconduct at BharatPe.
In its statement, BharatPe said that Grover’s resignation came minutes after he received notice that “some of the results of the inquiry would be presented to the Board”.
In its investigation, PwC is also learnt to have looked at specific concerns flagged by independent advisory firm Alvarez & Marsal (A&M) over misappropriation of funds. A&M was hired by BharatPe through its legal firm Shardul Amarchand Mangaldas.
What is next for Grover and BharatPe?
A prolonged legal battle is possible over Grover’s stake in the company. As of August last year, he held 9.5% stake in the company, of which 1-2% are restricted shares.
In his resignation mail, Grover wrote that he intends to continue to be the largest individual shareholder in the company. However, sources have indicated that the board intends to invoke clauses from Grover’s shareholder agreement to claw back on his stake — which Grover believes is worth Rs 4,000 crore.
What has the tussle between BharatPe and Ashneer unfolded?
The issue came to light in early January shortly after an audio clip surfaced, in which Ashneer was purportedly heard using expletives against a Kotak Bank staffer. While he claimed that the audio clip was fake, the bank said it would take legal action over it.
Two weeks later, Ashneer went on voluntary leave of absence until March-end. This happened after an e-mail thread between Ashneer and Sequoia, BharatPe’s largest shareholder, highlighting differences between the two parties came to light. Meanwhile, Ashneer’s wife Madhuri Grover Jain was also sent on leave of absence.
Later in January, BharatPe called in independent auditors to look into the company’s practices under Grover. A preliminary report by A&M in February accused Madhuri of financial fraud. On February 23, BharatPe sacked Madhuri on the charges of misappropriation of funds. Last week, Singapore International Arbitration Centre (SIAC) rejected Ashneer’s emergency plea against the ongoing governance review.
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