One week after BharatPe founder Ashneer Grover was put on a leave of absence by his board, his wife Madhuri Jain Grover, Head of Controls at the $3 billion fintech has also gone on leave as scrutiny over the company’s practices grow, said sources aware of the matter, requesting anonymity.
While Grover took a leave of absence till March-end amid backlash regarding his abusive language to a Kotak employee, toxic culture at BharatPe, and brash behaviour, his wife also going on leave signifies larger issues around governance at BharatPe, these sources said.
BharatPe’s board and external consultants are conducting a forensic investigation into the company’s practices, including accounting, approval processes, expenses and hiring.
"This is not about a personal dispute or a legal notice to Uday Kotak anymore. The fact that his wife also has gone on leave shows the scope of the board's investigation has widened. Ashneer's return now looks increasingly difficult," a person familiar with the development said.
Another person confirmed that a full-scale investigation into governance processes at BharatPe- known for its QR code aggregating app and lending platform, adding that the board is conducting several interviews to find out areas where practices were falling short of adequate standards.
Madhuri Jain Grover, who heads Controls at BharatPe was as powerful as Grover when it came to running the company, people say. A graduate of the National Institute of Fashion Technology, she worked in the fashion and design industry before joining BharatPe in October 2018.
While BharatPe did not comment on Grover’s exit, in response to Moneycontrol’s detailed query, it said that it had appointed management consultant and risk advisory firm Alvarez and Marsal to advise the board on its recommendations.
“The board of BharatPe is committed to the highest standard of corporate governance at the company and is doing an independent audit of the company's internal processes and systems. BharatPe, through its legal firm, Shardul Amarchand has appointed Alvarez and Marsal (A&M), a leading management consultant and risk advisory firm to advise the board on its recommendations,” the company spokesperson said.
“The board strongly believes in protecting interests of all stakeholders, including customers, employees, and partners,” the spokesperson added.
In an interview with Moneycontrol on January 27th, 2022, BharatPe CEO Suhail Sameer had said the board is doing a thorough review. "Whatever we decide will be in the best interest of BharatPe, our customers, and our employees."
He further said while Ashneer Grover has been central to getting the company this far, any company "does not run solely on one individual."
The board is looking into issues including invoices possibly being over-inflated and some vendors possibly being fake, said a person directly aware of the matter, who did not want to be named. This person also suggested the possibility that when a merchant recorded a transaction, BharatPe may have inflated the value of these transactions.
Reuters reported earlier today that BharatPe may undergo a governance audit, and is in talks with firms including PwC and Alvarez & Marsal to bolster its internal governance including disclosures about personal investments and possible conflicts.
Grover's fortunes have rapidly unraveled in the last two weeks, from being recognized as the founder of one of India's hottest startups to being blamed for all that is wrong with the Indian startup ecosystem. Things escalated after Moneycontrol reported on January 9, 2022, that Ashneer Grover and his wife sent a legal notice to Kotak Mahindra Bank MD and CEO Uday Kotak, and his senior management, accusing the bank of failing to secure financing and allocation of shares in an IPO launched by beauty firm Nykaa.
Kotak Group in turn alleged that Grover used foul and threatening language towards its employees and that it reserved the right to take legal action against him.
Moneycontrol reported earlier that BharatPe’s board of directors - investors from Sequoia India, Ribbit Capital, Coatue Management, and senior bankers-- ex-SBI Chairman Rajnish Kumar and ex-Union Bank Chairman Kewal Handa-- were unanimously insisting that Grover needs to leave for some time. They saw this as a personal issue and hence decided to send him on leave instead of firing him. While the altercation with Kotak was of a personal nature, Grover’s rude demeanor has previously antagonized investors and senior employees.
In late 2020, Suhail Sameer, a veteran of the RP Sanjiv Goenka Group joined BharatPe and became its CEO, handling daily operations, leaving Grover to oversee fundraising and big picture plans. Sameer and Grover both sit on BharatPe’s board. Sameer and co-founder Bhavik Koladiya will continue to manage day-to-day operations.
