BharatPe’s Investigation Finds Recruitment Fraud And Fake Invoices Related To Ashneer Grover

A story which had begun with a viral foul-mouthed video appears to have turned a lot more serious.

The BharatPe Board has found financial irregularities in its investigation into founder Ashneer Grover and his wife Madhuri Jain, who was the Chief Of Controls at the company. Grover and his wife are currently on “voluntary leave” from BharatPe after an audio clip in which Grover had appeared to threaten a Kotak employee had gone viral, and the board had hired independent consultants to probe into their conduct.

And the preliminary results of the investigation seem to be concerning — an 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. The preliminary findings of the report by A&M, dated January 24, said the company (BharatPe) paid recruitment fees to a number of ‘consultants’ on employees recruited through them. But in some cases, the employees denied being recruited through these consultant. “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.

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.

Besides, the firms involved in generating the invoices had commonalities such as similar email addresses, similar physical addresses, similar formats, same bank branches, etc. All these firms were based in Panipat. The report notes that Madhuri Grover is originally from Panipat.

An examination of just two of the vendors pegged the amount paid by BharatPe for undelivered services at close to ₹4 crore. The report also found that close to Rs. 51 crore was paid to 30 vendors who appeared to be non-existent. These vendor payments were caught by the Directorate General of GST Intelligence (DGGI). The company, instead of contesting the demand for service tax, paid close to Rs. 11 crore in dues along with penalties. The person responsible for procurements at the company was one Deepak Jagdishram Gupta, who is Madhuri Gupta’s brother in law.

A&M has recommended to the board that this requires deeper investigation as to why the company was dealing with ‘non-existent vendors’.

These are serious charges, and indicate that Ashneer Grover might’ve been siphoning off money from BharatPe through fake invoices and billing vendors for non-existent services. Worse, Grover seemed to have installed his relatives at key positions in the company — his wife was the head of controls, and his wife’s brother-in-law was in charge of procurements. These related parties could’ve worked in concert to defraud BharatPe’s investors and steal money from the company.

Grover, for his part, has said he welcomes any investigation into his conduct at BharatPe. “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,” he said in an interview.

But while Boards often look the other way in terms of founder behaviour — maverick founders are often given leeway with their conduct as long as they keep creating value for the company — they take a much more serious view of financial fraud. While Grover’s case might’ve started off with a foul-mouthed tirade which could’ve been swept under the carpet, the recent allegations are of a much more serious nature, and directly pose questions at the integrity of Grover and his family members. And if these allegations do prove to be true, Grover could well be on his way to bidding goodbye to the company he’d founded.