Independent probe finds financial irregularities at BharatPe as pressure mounts on Ashneer Grover and wife

Bengaluru: A preliminary investigation by Alvarez and Marsal (A&M) commissioned by BharatPe’s board has found fraudulent transactions including payments to non-existent vendors as well as irregularities of invoices being produced to substantiate spends. This comes amid mounting pressure from BharatPe’s board on the company founder Ashneer Grover to exit the fintech firm permanently.

Grover is temporarily on leave from the company, in the aftermath of a leaked audio clip where he’s allegedly abusing an employee of Kotak Mahindra Bank.

Report findings

The findings of the report by A&M, dated January 24, said the company (BharatPe) pays recruitment fees to a number of ‘consultants’ for employees recruited through them. “In five sample cases, the employees have confirmed their date of joining as slated in the vendor invoice. But they have denied being recruited or engaged through the stated consultant or any knowledge of them,” the report, reviewed by ET said.

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The report mentions BharatPe’s founder Ashneer Grover’s wife Madhuri Jain received at least three of these invoices herself and forwarded them to the company for payments. The invoices were created by Shwetank Jain, Jain’s brother, the report added.

“As per the document, the creator of all these invoices is ‘Shwetank Jain’. We understand from public domain sources that the brother of Madhuri Jain is ‘Shwetank Jain’. We noted invoices of three other vendors related to recruitment expenses. These have the same commonalities as mentioned above and all have the ‘author’ in document properties as ‘Shwetank Jain,” read the preliminary findings of A&M.

Livemint first reported the development on Friday morning.

On January 31, ET had reported that Grover along with his wife Madhuri were under the scanner for financial irregularities. We also reported that Grover had brought onboard New Delhi-based law firm Karanjawala & Co to take legal advice amid mounting pressure on him from the board to leave the company.

In an exclusive interaction with ET on January 31, the first since the Kotak audio clip saga unfolded, Grover said he is happy to move on from an executive role and stay on as a shareholder and a founder of the fintech firm valued at $2.8 billion.

“ I do not fear anything, and I know how to create value, and will not waste my time in politics or where there is just value preservation. Irrespective of what happens, no one can take it away from me that I created BharatPe from scratch at a record time. If I don't have the same degrees of freedom, I'm equally happy being a shareholder and a founder…” he had said.

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Grover also said he will participate in the investigation as long as it is as per Indian laws.

“I'm happy to participate in anything, as long as it is fair and as per Indian laws. Anything which is extrajudicial or if anyone wants to go overboard—I will not be able to participate. I'm very clear as far as my personal wealth is concerned—it's an open book,” added Grover.

DGGI intervened earlier
BharatPe’s dealings with non-existent vendors were also highlighted after an investigation undertaken by the Directorate General of GST Intelligence (DGGI), last year. According to the probe document, the DGCI conducted a search operation in the company’s head office on October 21, last year.

The DGGI had also summoned the company’s authorised signatory to produce copies of purchase invoices along with transport documents. It had also requested bank statements reflecting payments made to these vendors.

“On 11 November 2021, the company sent a communication to DGGI on the issue. The letter was signed by ‘Deepak Jagdishram Gupta’. We understand that he was responsible for the procurements made to the vendors and is also the brother-in-law of Madhuri Grover,” A&M probe document in BharatPe read.

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In the same letter, Gupta confirmed that some of these vendors never existed.

“We have come to know that our vendors, as informed by the DGGI officers, do not exist or never operated at their principal place of business. We do not want a Show Cause notice from the department on this matter and request you to wave SCN,” pleaded Gupta to DGGI in his reply.

In addition, to correct its accounts post DGGI’s investigation, BharatPe reversed input credit of Rs 9.54 crore and additionally paid a penalty of Rs 1.54 crore, taking the total loss of dealing with non-existent

In its probe, A&M has now raised questions on BharatPe’s dealings asking the company about why it was engaged with non-existent vendors and why it was unable to provide proof of delivery of materials.