More trouble for Ashneer Grover as BharatPe strips him of co-founder tag; could claw back some of his shares

He resigned from the company in the small hours of Wednesday, minutes after a company email asked him to attend a board meeting scheduled later in the evening

Ashneer Grover. Photo source: bharatpe.com

New Delhi, March 2

Fintech company BharatPe has stripped its co-founder Ashneer Grover of all positions for its alleged “misdeeds” and may take further legal actions, including clawing back of some of his shareholding.

BharatPe, which allows shop owners to make digital payments through QR codes, said in a statement Grover resigned after receiving the agenda for an upcoming board meeting that included submission of an independent audit regarding his conduct.

The Board of the company met last evening, and the meeting went past midnight, following which a statement was issued.

The company said it reserves the right to take action based on the report’s findings.

“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 account and grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles,” it alleged.

Minutes before midnight of March 1, Grover got an email inviting him for a board meeting at 19:30 on March 2. He resigned just past midnight.

Sources said the Board of BharatPe took note of the termination of employment of Grover as a consequence of his resignation from the post of managing director as well as a director on the company board.

But, since he resigned without the approval of the board and majority investors, consequences under the shareholder agreement have now been triggered, they said, adding this could mean that the company is within its right to claw back shares up to 1.4 per cent.

Grover currently owns a 9.5 per cent stake in BharatPe, while his co-founder Shashwat Nakrani owns 7.8 per cent. Investor Sequoia Capital India is the largest shareholder in BharatPe with a 19.6 per cent stake, followed by Coatue at 12.4 per cent and Ribbit Capital at 11 per cent.

When contacted, Grover said he was appalled at the personal nature of the company’s statement but not surprised.

“It comes from a position of personal hatred and low thinking,” he said. “I would want to learn who among Amarchand, PwC, and A&M has started doing an audit on ‘lavishness’ of one’s lifestyle?” BharatPe, which has engaged a law firm and risk advisory consultants to conduct a more detailed investigation after allegations of financial irregularities, sacked Madhuri Jain, head of controls and wife of Grover, last month for alleged financial irregularities, including using the company funds for personal visits abroad, beauty treatments, buying electronics, and paying for helps employed at her house.

The company statement alluding to the lavish lifestyle may have referred to Jain’s misuse of funds.

A preliminary internal investigation has pegged the magnitude of the financial misconduct at over Rs 50 crore. PricewaterhouseCoopers (PwC) alongside Alvarez & Marsal (A&M) is doing the audit.

Grover, however, said the “only thing lavish about me is my dreams and ability to achieve them against all odds through hard work and enterprise”.

He went on to state that he would want the Board to be reminded “USD 1 million of secondary shares investors bought from me in Series C, USD 2.5 million in Series D and USD 8.5 million in Series E”.

“I hope the board can get back to working soon—I as a shareholder am worried about the value destruction. I wish the company and the board a speedy recovery,” he said.

Grover, who was sent on a two-month leave of absence on January 19 following allegations of using abusive language against Kotak Mahindra Bank staff and fraudulent practices, had filed an arbitration plea with the Singapore International Arbitration Centre (SIAC), claiming the company’s investigation against him was illegal.

The emergency arbitrator (EA) last week rejected all the five grounds of his appeal, denying him any relief.

Just days before his resignation, his wife Madhuri Jain, who helmed procurement, finance, and human resources departments from the company’s early days, was fired following the review and her ESOPs were cancelled.

BharatPe said in the statement that the Board directed a thorough review of the company’s internal controls to uphold the highest governance standards, and in light of complaints received.

“Minutes after Mr Ashneer Grover received notice that some of the results of the inquiry would be presented to the Board, he quickly shirked responsibility by sending an email to the Board, submitting his resignation and fabricating another false narrative of the events to the public,” it said. “The company has taken strong objection to Mr Grover spinning lies and hurling baseless allegations and threats”.

The company said it reserves all rights to take further legal action against him and his family.

“The Board will not allow the deplorable conduct of the Grover family to tarnish BharatPe’s reputation or that of its hard-working employees and world-class technology,” it said. “As a result of his misdeeds, Mr Grover is no longer an employee, a founder, or a director of the company.”

Grover has reportedly made several allegations on BharatPe board members and investor Sequoia Capital.

A media report quoted Grover as saying that if he were to “open his mouth”, Sequoia will not only be able to not make a single investment in India but it would also have the Central Bureau of Investigation and the Enforcement Directorate on its heels.

“The Board remains highly focused on supporting the growth and continued success of the company. The Board is taking all necessary steps to further strengthen the company’s corporate governance, including the appointment of an audit committee, an internal auditor, and the implementation of other key internal controls,” the company statement said.

The success of BharatPe, it said, is a result of the collective effort of a large team of dedicated and talented professionals, and not anyone individual.

“We are confident that the company is marking the beginning of a new chapter in its success—one grounded in trust and integrity—and we are excited to embark upon this next leg of our journey.”