Ashneer Grover Files Arbitration Plea With SIAC; Seeks Termination Of BharatPe’s Investigation

BharatPe cofounder Ashneer Grover has filed an arbitration plea with the Singapore International Arbitration Centre (SIAC) against the company’s internal investigation. He has reportedly claimed that the Alvarez & Marsal (A&M) report and preliminary investigation is invalid because it was in violation of shareholder agreement and articles of association.

According to Grover, the company has no authority to conduct such an investigation since it is illegal in nature, Mint quoted a source. In his plea, Grover claims that despite numerous representations and objections, BharatPe has deliberately kept the review and assessment by the review committee an opaque process. The Board has not allowed him to present his case.

“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.

In the plea, Grover has also sought interim relief against CEO Suhail Sameer. “The appointment of Suhail Sameer as a director be kept in abeyance, and he be restrained from discharging any functions as director of the company,” Grover said.

Inc42 couldn’t independently verify the development.

Ashneer Grover Caught In Headlights

BharatPe’s trouble with Grover came to a head when an audio clip of Grover allegedly threatening and verbally abusing a Kotak Mahindra Bank employee during a telephone conversation went viral.

Grover can be heard issuing ‘encounter’ threats and abusing a Kotak Mahindra employee in the viral audio clip — which he had claimed was fake, an attempt to tarnish his reputation. In the audio, Grover and his wife were talking to the relationship manager as they weren’t allocated shares during Nykaa’s IPO. The bank employee was trying to placate the unicorn founder in the alleged audio.

Following the controversy, cofounder Ashneer Grover and his wife Madhuri Grover took a voluntary leave of absence from the company.

In one of our previous stories, we had highlighted the startup’s challenges with corporate governance. While Grover and his wife were the talk of the town for the past few weeks amid the alleged audio leak, Bhavik Koladiya, a former cofounder of the startup and the current group head of product and technology, was convicted in a credit card fraud case in the US.

BharatPe later appointed A&M, a risk advisory firm to conduct an independent audit of the startup’s internal processes and systems after it was grilled for not taking an action despite seeing red flags in BharatPe’s corporate governance.

Meanwhile, Grover hired law firm Karanjawala & Co. to safeguard his shareholding in case he is ousted from the company.

The investigation into alleged financial irregularities at BharatPe widened when the fintech firm onboarded PricewaterhouseCoopers (PwC) to look into the company’s transactions, alongside Alvarez & Marsal (A&M); however, the scope of its involvement stands undisclosed.

Alvarez & Marsal’s preliminary inquiry had reportedly found fraudulent transactions and alleged instances of BharatPe routing money through fake HR consultant firms to Madhuri’s brother Shwetank Jain. Additionally, the investigation raised questions about the alleged conflict of interest in the acquisition deal of Payback (considering it was overvalued due to Payback’s leadership team and Grover being former American Express executives).

All these deals were signalled green-light by the BharatPe Board. Meanwhile, investigations are underway into every aspect of the startup – from marketing spending to financial transactions. However, clamour grows from within BharatPe’s Board for cofounder and managing director, Grover to exit the fintech startup permanently.

Ashneer Grover has also claimed that BharatPe CEO Suhail Sameer has forced him out of the company, followed by Jain claiming that she never actually tendered her resignation (hinting that the Board ousted her). Calling Sameer ‘a puppet of investors’, Grover has alleged a conspiracy behind sending him away and instituting a probe, according to a Moneycontrol report, which BharatPe has denied.

Alternately, the markets regulator SEBI has reportedly initiated an investigation into Kotak Wealth — the wealth management arm of Kotak. The markets regulator wants to ascertain whether there was any conflict of interest. This is further in line with Kotak starting an internal investigation on its relationship managers, to know if there was any violation of the ethical code of conduct or any instance of mis-selling.