Ashneer Grover Resigns: Here is What Went Wrong
The BharatPe cofounder said that he has been 'vilified' by the investors
Ashneer Grover, co-founder, BharatPe has resigned as the managing director and board director of BharatPe. This comes nearly two months since the audio clip of Grover allegedly verbally abusing a Kotak Mahindra Bank employee during a phone call was leaked and days after BharatPe sacked his wife, Madhuri Jain Grover, for alleged financial irregularities.
"I write this with a heavy heart as today I am being forced to bid adieu to a company of which I am a founder. I say with my head held high that today this company stands as a leader in the fintech world. Since the beginning of 2022, unfortunately, I've been embroiled in baseless and targeted attacks on me and my family by a few individuals who are ready not only to harm me and my reputation but also harm the reputation of the company, which ostensibly they are trying to protect," Grover said in a letter addressed to the BharatPe board, according to a news report.
He also added that "from being celebrated as the face of Indian entrepreneurship he is now wasting his time fighting a long, lonely battle against his own investors and management. Unfortunately, in this battle, the management has lost what is actually at stake – BharatPe."
Statement on behalf of BharatPe spokesperson said, "Ashneer Grover resigned as managing director and board director of BharatPe minutes after receiving the agenda for upcoming Board meeting that included submission of the PWC report regarding his conduct and considering actions based on it. The Board reserves the right to take action based on the report's findings."
Grover also said in the letter to the Board that he would continue as the single largest individual shareholder of the Company.
Founded in 2018, the merchant payments startup boasts of launching India's first interoperable UPI QR code, to offer a single interface for all existing UPI apps, supporting Paytm, PhonePe, Google Pay, BHIM, Mobikwik, Freecharge, TrueCaller and other apps through its service. Also, the startup is backed by marquee investors such as Tiger Global, Dragoneer Investment Group and Steadfast Capital, among others.
Furthermore, within three years of its launch, BharatPe entered the coveted Unicorn club in August 2021 after raising $370 million at a $2.85 billion valuation. The company became the fifth fintech startup in 2021 to achieve Unicorn status and in the next four years, Grover envisions the company to at least grow 10 times on an overall company basis.
What Went Wrong
It all started after an audio clip of Grover allegedly verbally abusing a Kotak Mahindra Bank employee during a phone call was leaked two months ago. Grover and his wife were heard talking about not being allocated shares during Nykaa's IPO. Grover claimed that the audio was fake and also said that it was meant to tarnish his reputation. Post this, Grover and his wife Madhuri took a voluntary leave of absence from the company.
Meanwhile, Bhavik Koladiya, former cofounder of BharatPe and the present group head of product and technology, was convicted in a credit card fraud case in the US.
BharatPe appointed a risk advisory firm, Alvarez & Marsal (A&M), to conduct an independent audit of the startup's internal processes and systems. Then Grover also hired a law firm, Karanjawala & Co, to safeguard himself, and then BharatPe appointed PricewaterhouseCoopers (PwC) to look into the company's transactions along with A&M.
Later, news reports said that A&M's preliminary inquiry found fraudulent transactions and instances of BharatPe routing money through fake HR consultant firms to Grover's brother-in-law Shwetank Jain. It also, reportedly, questioned the alleged conflict of interest in the acquisition deal of Payback.
Some blame games later, SEBI reportedly initiated an investigation into the wealth management wing of Kotak, Kotak Wealth.
Then, Grover filed an arbitration plea with the Singapore International Arbitration Centre (SIAC) against the company's internal investigation and seeking termination of the same. He reportedly claimed that A&M report and preliminary investigation is invalid because it was in violation of the shareholder agreement and articles of association.
"The review committee, which is constituted in violation of the terms of the SHA (shareholders' agreement), continues to act to the detriment of the claimant (Grover). The claimant stands to suffer extreme prejudice if the operation of the review committee is not prevented and stands to suffer irreparable harm and damage," Ashneer Grover said in the plea, according to the news report, linked above.
However, in a major setback for Ashneer Grover, he lost the arbitration. The emergency arbitrator said that there was no ground to stop governance review at the fintech firm, sources were quoted as saying in a news report.