BharatPe Board Chairman Rajnish Kumar on February 23 said company co-founder Ashneer Grover should have shown more maturity in the whole episode and alleged that Grover’s strategey is to make a case that governance review is biased against him.
“I agree that Ashneer should have shown maturity (in the BharatPe episode)… 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,” Kumar told Moneycontrol on February 23 in an exclusive conversation.
Kumar said the company's board is completely aligned on the required action if governance issues are found in the audit reports.
Grover Letter
The comments came after Grover shot a letter to the board of Resilient Innovations, the parent of BharatPe, on February 22, where he alleged that another co-founder Bhavik Koladiya had called him and asked to meet at a location without sharing an agenda. He has claimed that Kumar was also with him when the call came.
Grover also alleged Kumar of being biased and prejudiced and Koladiya as abusive. He stated that he reserves the right to take appropriate legal action.
Kumar, an ace banker and former head of SBI, said Grover’s letter won't have any impact on the company and its board is aligned to action. “No impact on the company and me. The company will emerge stronger. The board is completely aligned to what needs to be done,” said the veteran banker.
Asked why he offered to resign after the Grover letter, Kumar said the move was to affirm his clean stance in the matter. “Everyone knows that I am completely neutral. It (offer to resign) is just a reconfirmation if any one has any doubt,” he said.
Kumar added that the audit reports on the alleged governance issues in BharatPe have not reached the Board yet. “Report not yet received. All reports will come together to the board. Action will be taken on the basis of the audit report of PWC (Sic),” Kumar said.
The Issue
BharatPe, a payments company that services shop owners with QR codes, is facing intense investor scrutiny over alleged corporate governance lapses and a bitter internal tussle between Grover and the board.
The firm engaged Alvarez and Marsal to launch an independent governance audit. On February 4, Moneycontrol accessed the report that suggested inconsistencies in dealings with vendors. The report highlighted deals with vendors and payments to consultants that are non-existent.
BharatPe also roped in consultant PwC for a full-scale investigation into the company’s practices, including accounting, approval processes, expenses, and hiring.
BharatPe, together with Centrum Financial Services, promotes Unity Small Finance Bank that has acquired crisis-ridden co-operative bank Punjab and Maharashtra Cooperative (PMC) Bank. The amalgamation process, which came into effect on January 25, is still half way.
Alleged Governance Lapses
According to the Alvarez and Marsal report, BharatPe claimed to pay recruitment fees to hiring consultants for the employees they recruit. Alvarez and Marsal could confirm that some of the employees, as claimed to be hired through consultants, were brought on board.
However, the said employees have revealed that they had no interaction with any consultants in the process and have no knowledge of their existence.
Also, in three instances of payments made to these consultants, the report finds that Madhuri Jain Grover (married to Ashneer Grover) herself received invoices for payments and forwarded them to the accounts team.
These invoices were created by Shwetank Jain, who is the brother of Madhuri Jain Grover, according to the report. The vendors who received payments as recruitment expenses do not have any web pages or portals and the invoices provided by them too have similarities.
The report pointed out that all these invoices had the same typeface, similar email and physical addresses and even the same bank branches in some instances. "All of them, except one, have a Panipat connection. It may be mentioned that Madhuri Grover is originally from Panipat," the report flagged.
Larger Concerns
On February 4, Moneycontrol reported that the Reserve Bank of India (RBI) too is looking into any possible instances of corporate governance lapses at the startup.
BharatPe, in a statement issued on February 4, said Board is yet to receive an interim or final governance review report and that it has followed due process.
The statement comes after BharatPe Managing Director Ashneer Grover told Moneycontrol in an interaction that the board was arm twisting him into exiting the company.
"We are deeply pained that the integrity of the BharatPe board or individual board members is being questioned time and again through misrepresented facts and baseless allegations. The board in all its actions has followed due process in the best interest of the company," the company said in a statement.
Grover has accused CEO Suhail Sameer of siding with the investors to oust him from the company.
On February 22, Moneycontrol, citing sources, reported that Grover's lawyers are all set to invoke an arbitration and will be sending a notice to the company very soon, challenging their decision to conduct a governance review and making claims for an exit.
