Ashneer Grover Claims ‘No Fraud’, But What Does BharatPe’s FY22 Annual Report Say?

The ongoing controversy between fintech unicorn BharatPe and its former MD Ashneer Grover refuses to die down, as the latter has stirred the pot again by claiming that no fraud was discovered by BharatPe’s auditors in the financial year 2021-22 (FY22).

Sharing a page from BharatPe’s FY22 annual report, Grover tweeted that the auditor, Deloitte, did not find any instance of fraud, and attacked the reportage around the ongoing controversy.

Grover also launched an attack on a journalist at a national publication for pointing out parts of the annual report that do mention irregularities — parts that Grover failed to highlight in his original tweet.

(Translation: The report of the forensic audit you are talking about [into allegations against Grover and his family] by Alvarez and Marsal and PwC, on whom INR 9 Cr was spent by BharatPe, was junked and was neither presented to court nor police. So, you should ask the questions to your owners [alluding BharatPe paid her] and not me).

Grover also said individuals are ‘innocent till proven guilty’ as per Indian law, putting the burden of proof on BharatPe.

However, he did not reply to the concerns flagged in the annual report on the basis of which BharatPe eventually filed a criminal complaint, which has now been registered as an FIR by the Delhi Police’s Economic Offences Wing. 

A closer look into BharatPe’s FY22 annual report tells a very different story.

What BharatPe’s Annual Report Says

The section pertaining to findings of the governance review and forensic audit in BharatPe’s FY22 annual report showed that vendors were approved inappropriately and some of the vendors also received excess payments. These are some of the allegations in BharatPe’’s criminal complaint. 

Besides this, the statutory auditor also stated that BharatPe’s internal control systems were not operating effectively when it came to vendor selection, approval of invoices, recording reversal of GST and accounting adjustments.

These were identified as ‘material weaknesses’ by statutory auditors of BharatPe.

Incidentally, the governance review, initiated in January 2022 by BharatPe, found instances of overriding of internal controls by certain erstwhile employees, in collusion with known and unknown third parties.

The review filed by Alvarez & Marsal, Shardul Amarchand Mangaldas and PwC is said to have led to the ouster of Madhuri Jain Grover in February 2022, who was the head of controls at BharatPe. 

Inc42’s deep-dive into the problems of BharatPe and the Grover duo captures much of the media battle that has gone on unabated since January 2022.

BharatPe’s corporate governance review flagged allegedly problematic vendor selection and onboarding, procurements, and processing of bills for payment. It also mentioned instances of personal expenses being paid for by the company and related party transactions. 

Grover was also named in the governance review, which stated that his conduct and the omission of facts constituted ‘gross negligence’ and ‘willful misconduct’. 

“Before the company could proceed to take any action against Mr Grover, he voluntarily resigned from the post of Managing Director and as an employee of the Company on March 01, 2022,” the review added.

The Grovers Vs BharatPe: Lawsuits Galore

BharatPe has alleged that Ashneer Grover, his wife Madhuri Jain and other family members created fake bills, enlisted fictitious vendors to provide services to the company and overcharged the firm for recruitment.

The fintech unicorn is seeking up to INR 88.67 Cr in damages in a civil suit, and the EOW’s investigation of alleged fraud of INR 81 Cr is also ongoing. 

BharatPe has also filed an arbitration suit in the Singapore International Arbitration Centre to claw back restricted shares allotted to Grover, amounting to around 1.4% stake in BharatPe. Besides the fintech unicorn itself, Grover is also named in two separate lawsuits from BharatPe cofounders Bhavik Koladiya and Shashvat Nakrani.

Meanwhile, the fintech unicorn has seen a major leadership reshuffle over the past few months. CEO Suhail Sameer stepped down earlier this year, giving way to Nalin Negi, the CFO, to be interim CEO of the company. Last year, following the departure of the Grovers, BharatPe witnessed cofounder Bhavik Koladiya and founding member Satyam Nathani also depart, along with several top management.

On Monday (June 5), BharatPe announced the appointment of Kohinoor Biswas as the head of consumer lending.