Have not terminated services of any employee, says BharatPe Board

The Board said it remains committed to an independent and thorough audit process. It said no action has been taken or will be taken till the audit has been completed

Amid growing concerns over governance issues, fintech unicorn BharatPe on Saturday said the Board of the company has not terminated the services of any employee at this stage. According to a media report, BharatPe board has decided to terminate the services of Ashneer Grover, the company’s co-founder, and managing director. The report said the decision is based on a preliminary internal investigation that has thrown up indications of financial fraud. It said the company this week has also terminated the services of 15 employees, including Madhuri Jain, head of controls at BharatPe and who is married to Ashneer Grover.

“The Board of BharatPe has not terminated the services of any employee at this stage. Reports suggesting any termination are baseless and untrue,” said BharatPe in a statement.“The Board remains committed to an independent and thorough audit process. No action has been taken or will be taken till the audit has been completed. We again urge the media not to speculate in advance of the report and make a judgement based on uninformed sources.”

BharatPe on Saturday afternoon announced that an independent audit of its internal processes and systems is being conducted. The development comes a few days after Ashneer Grover, co-founder, and MD, BharatPe went on a voluntary leave of absence till March end amid backlash regarding him allegedly speaking in abusive language with a Kotak Mahindra Bank employee. Grover’s wife, Madhuri Jain Grover, was also part of the conversation. She has also reportedly gone on leave. An audio clip on Twitter showed the couple allegedly insulting the manager for failing to get an allotment and finance for Nykaa's IPO. Grover, in a tweet, initially said the clip was fake but later withdrew the comment.

BharatPe has appointed consulting firm Alvarez and Marsal to conduct an independent audit to strengthen internal processes and systems.

“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,” said the company on Saturday. “BharatPe, through its legal firm, Shardul Amarchand Mangaldas has appointed Alvarez and Marsal, a leading management consultant and risk advisory firm to advise the Board on its recommendations.”

Many in the industry say that quite apart from the Kotak controversy, concern had been growing about the work culture at BharatPe receiving increasingly bad publicity, along with Grover’s presence on the popular start-up TV show Shark Tank when some of his comments while talking to entrepreneurs pitching for funds sounded rude.

According to other sources, BharatPe’s board of directors, including top bankers such as former SBI Chairman Rajnish Kumar and ex-Union Bank Chairman Kewal Handa and investors from Sequoia India, Ribbit Capital, and Coatue Management, have been emphasising for some time now that Grover needs to leave.

“The Board strongly believes in protecting the interests of all stakeholders, including customers, employees, and partners,” said BharatPe. “We request the media not to speculate until audit findings have been completed."

According to Reuters, the audit will assess if BharatPe's senior executives are making proper internal disclosures about personal investments and check for conflicts, leading to a new code of conduct.

BharatPe has come under intense investor and media scrutiny after co-founder Ashneer Grover sought damages from Uday Kotak, head of Kotak Mahindra Bank, alleging that the bank declined financing for a personal investment, Reuters reported. 

Private sector lender Kotak Mahindra Bank, in turn, this month said that it was pursuing appropriate legal action in the Ashneer Grover case. Grover who had sent a legal notice to the bank on October 30, 2021, for allegedly failing to provide initial public offering (IPO) financing in the IPO of FSN E-Commerce Ventures Ltd, or Nykaa, and to allocate its shares in the HNI/NII category.

“The (legal) notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr. Grover. Appropriate legal action is being pursued. We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever,” said the bank in a statement.