Payments firm BharatPe on Wednesday said its erstwhile managing director and co-founder Ashneer Grover was “no longer an employee, founder or director" and that he and his family had indulged in “extensive misappropriation of company funds".
The statement drew the curtains on weeks of sniping between the outspoken executive and the company, which dragged in board members, investors, and co-founders and engulfed the company in an unseemly public spectacle. While it all started with a leaked phone conversation in which Grover was heard abusing a Kotak banker, he and his family now face serious fraud allegations.
While Grover resigned early on Tuesday morning, the company said that was minutes after he received the agenda for the board meeting scheduled for later that day, which was to consider the findings of an independent governance review at the firm.
BharatPe Looks to Claw Back Shares
According to an ET report, the payments firm is looking to claw back its cofounder Ashneer Grover’s restricted shares in the company.
AoA Provisions to Buy Back Shares
The AoA of the three-year-old company has the provision for removing a founding member for a cause, and his equity can be bought back by the company at a fair market value, a person with direct knowledge of the matter told Mint earlier.
The provision can be invoked if the cause involves gross negligence or wilful misconduct as determined by a Big Four accounting firm. This is why the board has brought in PricewaterhouseCoopers to conduct a forensic audit of its accounts.
Grover currently holds roughly 8.5 per cent stake in BharatPe. Of this 1.4 per cent is not vested, according to the people quoted above. These shares alternatively can also be transferred to an employee welfare trust at lower price or at the price paid by the relevant founder.
The company defines restricted shares as 75 per cent of the founder’s shares after BharatPe’s Series C funding in 2019 and follow-on shares issued at the closing of Series E funding.
What Does the PWC Report Say?
In its investigation, PwC is also learnt to have looked at specific concerns flagged by independent advisory firm Alvarez & Marsal (A&M) over misappropriation of funds. A&M was hired by BharatPe through its legal firm Shardul Amarchand Mangaldas.
Although the board meeting happened on Tuesday night, the company has not disclosed the decisions taken — and whether a first information report will be filed based on the audit report.
After the company’s public allegations of financial misconduct on Wednesday, Grover said: “I am appalled at the personal nature of the company’s statement, but not surprised. It comes from a position of personal hatred and low thinking.”
Legal Battle Awaits
In the statement, BharatPe said to uphold the highest governance standards, and in light of complaints received, the Board directed a thorough review of the company’s internal controls.
“Minutes after Mr Ashneer Grover received notice that some of the results of the inquiry would be presented to the Board, he quickly shirked responsibility by sending an email to the Board, submitting his resignation and fabricating another false narrative of the events to the public," it said. “The company has taken strong objection to Mr Grover spinning lies and hurling baseless allegations and threats".
The company said it reserves all rights to take further legal action against him and his family.
“The Board will not allow the deplorable conduct of the Grover family to tarnish BharatPe’s reputation or that of its hard-working employees and world-class technology," it said. “As a result of his misdeeds, Mr Grover is no longer an employee, a founder, or a director of the company."
Grover’s Allegations on Sequoia
Grover has reportedly made several allegations on BharatPe board members and investor Sequoia Capital. According to a media report, Grover has said if he starts speaking then Sequoia will not be able to make a single investment in India, and there will be ED and CBI behind them.