The Indian startup ecosystem is taking a dim view of the situation at Gensol, which had seen over Rs. 200 crore of loans be frittered away by the company on DLF apartments and golf club sets.
Mohandas Pai, renowned venture capitalist and former CFO of Infosys, didn’t mince words when he expressed his outrage at the alleged financial impropriety at Gensol Engineering Limited. His said that the founders were “white-collar criminals” who should be “prosecuted and put behind bars”.
“This is a corporate governance total failure,” Pai said in an interview on Republic. “Somebody should have found out what is happening because when you take money from somebody, it has to be properly accounted for. There are quarterly reporting standards. There are audit committees that have board meetings every quarter.”
He continued, “I think the entire system has failed because when you siphon off money like this, you can always trace it. And when you look at related party transactions – that is transactions with entities where you have a financial interest – they have to be approved by the audit committee and the board. So these are failures on a colossal scale.”
“Public money that has been borrowed has been siphoned off,” Pai asserted. “It is a criminal offense, and these people are white-collar criminals, and they must be prosecuted and put behind bars. This is a classic case of corporate theft. Now, I don’t think anybody should blacken the startup or industry at all.”
Pai’s remarks come after SEBI had released a damning report which had detailed how Gensol’s founders, Anmol and Puneet Singh Jaggi, had diverted loans meant to buy electric vehicles for the Blusmart fleet to their own personal ends. They’d used the money to pay approximately Rs. 43 crore for an apartment in DLF Camellias, buy foreign currency, and a purchase an expensive golf club set worth Rs. 26 lakh. They’d also given away money to their family members. An estimated Rs. 200 crore was siphoned off in this way.