Madhuri Jain Grover Vs BharatPe: Mudslinging Shows All’s Fine Till Trouble Comes Calling

The BharatPe drama — might as well call it that — never ceases to amaze or even slow down. After a raft of allegations against the cofounder Ashneer Grover and his wife Madhuri Jain Grover, the latter decided to air her grievances with the company even more publicly this week through a series of tweets.

Previously, Jain Grover had alleged that the BharatPe board had accepted her resignation, even when one was not furnished. She had claimed that the board assumed that she had resigned based on a stray statement by Ashneer Grover, even though she had only offered to go on a leave of absence.

According to reports that came soon after, Jain Grover was terminated from BharatPe because of alleged financial irregularities discovered by the company, which involved her and Ashneer Grover. But now, Jain Grover has come out swinging with more allegations around the culture at BharatPe.

A Case Of Sour Grapes?

Jain Grover, who was the head of controls at the fintech unicorn, dredged up videos of people partying inside the BharatPe offices, which she alleged were “drunken orgies”, where women were treated like objects. Now, these are very serious allegations against the company, but the big question, of course, is why now?

The videos posted by her depict celebrations inside the office premises, but there is no indication of how old these videos are. If Jain Grover thought these incidents were serious enough to be highlighted as problems within BharatPe, why only speak out when trouble has come calling for her?

In fact, in many of them, one can spot Ashneer Grover in the background, as jovial as the others and indeed dancing with the employees, as seen below:

BharatPe CEO Suhail Sameer and the other cofounder Shashvat Nakrani were also seen in some of the videos.

So at least one of the Grovers was actually involved in the parties that have been alleged to be out of order.

It’s also clear that the videos were not filmed because of any problematic incidents that took place during them. They seem to be just snapshots of regular parties where nothing untoward is happening.

And of course, there’s nothing wrong with people partying in the office or indeed dancing. This might as well be a video of any startup, where big milestones are followed by celebrations. As a company that makes no bones about the fact that it’s chasing high growth, BharatPe unsurprisingly has a ‘work hard, play hard’ culture.

Grovers Vs Bhavik Koladiya

Besides videos, Jain Grover also posted audio clips, the veracity of which could not be ascertained independently. In these, BharatPe’s former cofounder Bhavik Koladiya is heard in a heated argument with Ashneer Grover over a meeting to discuss the situation at the company. The alleged phone call ends with abuses from Koladiya. Jain Grover further alleged that Koladiya is working with the company to bring down the Grovers.

It must be noted that Koladiya leads product and engineering at the company, but was once a cofounder. Till 2018, Koladiya held over a 30% stake in the company, which was later diluted in subsequent rounds as more and more VCs backed the company.

Over its past four funding rounds, the equity held by VC funds in BharatPe has grown from 16.7% to 66.1%, A bulk of the Koladiya’s shares were sold to VC investors in these rounds, while Ashneer Grover’s own holding fell from 22.7% to 9.5%.

Incidentally, Koladiya was convicted in a credit card fraud case in the US. While his conviction and subsequent sentencing as time served in the US does bar him from holding directorships in the US, the same does not hold true for India. However, the investors in the company, many of whom have US-based limited partners do need to be wary of conducting business with convicted individuals.

The company’s majority stakeholders include Sequoia Capital with a 19.6% stake, Coatue (12.4%), Ribbit Capital (11%), Beenext (9.6%), among others. While Koladiya does not have any shares in the company directly, sources told Inc42 that Ashneer Grover and the other BharatPe cofounder Shashvat Nakrani are holding his equity for him. Sequoia Capital is said to be aware of this, as per sources.

Jain Grover had alleged that Koladiya is a third-party vendor, yet he’s been given a seat in discussions around the situation at BharatPe. She claimed that Koladiya along with BharatPe board chairman and former SBI chief Rajnish Kumar were trying to squeeze the Grovers out. “The current review is clearly just an eyewash and means to an end,” she tweeted.

Earlier, Ashneer Grover had alleged that the involvement of Rajnish Kumar shows that the “Governance Review is riddled with premeditation, bias and prejudice” and “erodes any semblance of non-partisan supervision by him”.

BharatPe’s Dirty Laundry In Public

As the controversies around the Grovers, potential layoffs, the company’s board, the lack of due diligence and corporate governance procedures snowball, the skeletons are tumbling out of the BharatPe closet.

Reports now indicate that investors and the board have turned down an offer made by Ashneer Grover to sell his 9.5% stake in the company for over INR 4,000 Cr. According to a Business Standard report based on unnamed sources, the company is unlikely to agree to any offer to buy back Grover’s shares, since it is a minority stake and the basis of his valuation has no meaning.

Indeed, the problems are now compounding rather seriously for the company. Even Rajnish Kumar has reportedly stated that the fracas is testing his patience.

“Should the board members have any doubts about my impartiality in the matter, I have no intention to continue and can’t tolerate this type of mudslinging by anyone,” he is said to have responded to allegations of partisan decision-making by Grover.

Will the company bounce back from this trough and be able to focus on its business. For the last few weeks, pretty much everything about the company has been in relation to these controversies. It’s not about to slow down now either with the rather public fallout from the board tussle. In the past, we have seen power struggles and board tussles leading to acquisitions by larger entities. Will this be the case for BharatPe too?

These snowballing issues and the mudslinging threaten to crush whatever growth or scale BharatPe had seen in the past, and will allow competition to capitalise on the temporary flux and inertia of the unicorn.