Home Brief BharatPe probe busts financial fraud nexus involving Ashneer and family

BharatPe probe busts financial fraud nexus involving Ashneer and family

The probe at BharatPe has uncovered a trove of financial frauds involving Ashneer Grover, his wife, her brother, and her brother-in-law. Fake invoices, payments, and other financial irregularities amounting to tens of crores of rupees have brought the whole family under the grip, and their exit from the company seems certain now.

0
648
Ashneer madhuri

The pandora box is open! And, it will bring more trouble for Ashneer Grover, the controversial co-founder & CEO of BharatPe.

Earlier this week we reported about how the company tightened the noose around Ashneer by employing an external auditor. It has now come to light that investigating agency has found at least two instances of fraud at BharatPe. And, this would definitely increase the trouble for Ashneer who is in no mood to go down without a fight.

The merchant-focused fintech company has been hampered in recent weeks due to the controversy surrounding its co-founder Ashneer Grover. But the inquiry was not limited to Ashneer alone; Madhuri Grover, the firm’s controller until recently and the spouse of Grover, is reportedly involved in both fraudulent schemes.

Advertisements

Alvarez and Marsal, a.k.a A&M, an advisory firm that specializes in risk management, submitted a report to the BharatPe board on 24 January. If we believe on media reports, the board had reached a decision to terminate Grover’s services based on the preliminary reports. The board, however, has sought a more comprehensive report before making a final move.

Ashneer is accused for allege financial wrongdoing on two main grounds. The first is irregularities in recruitment, and the second is about paying vendors who don’t exist. Madhuri Grover was the head of control at BharatPe and had previously headed the procurement and administration departments. 

It’s not yet clear if Ashneer, along with his wife, is asked to submit his reply.

A trove of financial frauds at BharatPe

Like every other thriving company, BharatPe took the service of external recruitment agencies and paid recruitment fees to recruit employees. Shocking, the investigation report reveals that BharatPe was fraudulently paying staffing companies to recruit staff. They also paid a network of staffing firms that had nothing to do with the hiring. These companies appear to be connected to Madhuri Grover as well as each other.

A&M reviewed invoices for fees paid to these consultants. According to the invoice, employees confirmed that they had joined on the date stated but denied that they were recruited by the consultants mentioned or had any knowledge about them.

Advertisements

A&M also noted that in some cases Madhuri bypassed the process and had received invoices directly from vendors, and later forwarded them to the accounts team for payment.

The majority of these companies were sole proprietorships. According to the report, it was none other than Shwetank Jain, the brother of Madhuri Jain, who played a role here and created the fake invoices.

The firms found many similarities, such as identical email addresses, physical addresses, and similar formats, in sharing it with the board of BharatPe. Interestingly, they were all located in Panipat, the native place of Madhuri Grover.

A close examination of two vendors revealed that the amount BharatPe paid for undeliverable services was to the tune of Rs 4 crore.

A Nexus of relatives

The report indicates that financial fraud at BharatPre could be to the tune of hundreds of crores of rupees. The non-existent vendors received nearly Rs 51 crore under the watch of Ashneer and Madhuri.

The pandora box has frauds that are linked with the GST as well. The payment to these vendors could escape from the eyes of the Directorate General of GST Intelligence. Instead of challenging the demand for service taxes, Rs 11 crore was paid from the company’s accounts to GST in dues and penalties.

Just 10 days before the leaked audiotape came to light, DGGI found these irregularities. The audiotape also led to the revelation that Grover and Kotak Wealth Management were locked into a legal tussle after Grover failed to secure financing to found his ambition of buying a sizeable share of Nykaa‘s during its IPO.

The company, however, submitted its clarification in this regard to the DGGI on 11 November 2021. And, all these communications were handled & signed by Deepak Jagdishram, another family member of Grover. Deepak Jagdishram who was responsible for procurement in the company is Madhuri Grover’s brother-in-law.

Gupta also tried to bury the matter without much noise. In the clarification letter he wrote to DGGI, he expressed his unawareness about the non-existing vendors and silently agreed to pay the penalties and dues, and requested that the department withdraw the show-cause notice.

Preliminary investigation revealed that the total payment made to the factious 30 vendors was approx. Rs 53.25 crores (under validation). The company reversed the claim of Rs 9.54 crore in input credit and paid a Rs 1.54 crores penalty.

But that’s could just be the tip of the iceberg as A&M suspects uncovering a few more irregularities in the company. Therefore, the investigating agency has recommended to the board that further investigation must be done to determine if there were more financial irregularities and why the company was dealing with non-existent vendors.

The pandora box is open now, and further investigation may uncover many more skeletons buried by Ashneer and Madhuri. Whatever be the next move by the company, the exit of Ashneer Grover, along with his wife and other relatives, is clear from BharatPe is certain. Now, it would be interesting to see if the company gives them a safe passage and walk off with their stakes in the company. A lot more is yet to happen, keep following us.

Update 1: In the latest development, Ashneer has refused to go down without a fight, and asked the board to buyout his stake of 9.5% for Rs 4,000 crore, estimating the valuation of BharatPe a whopping $6 billion.

NO COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here