The board acted quickly and decisively: BharatPe co-founder Nakrani on Grover’s removal

Last week, the company stripped Mr. Grover of all titles and positions for alleged “misdemeanor” and may pursue further legal action

Last week, the company stripped Mr. Grover of all titles and positions for alleged “misdemeanor” and may pursue further legal action

BharatPe co-founder Shashvat Nakrani has accused Ashneer Grover, with whom he co-founded the payments startup, of creating a misrepresentation about the company and said the board acted quickly and decisively to oust him after he had received the findings from PwC a report.

BharatPe, which allows shopkeepers to make digital payments via QR codes, stripped Mr. Grover of all titles and positions for his alleged “misdeeds” last week and could face further legal action, including recovering part of his holding.

In a letter to staff, Mr Nakrani said the Grover episode was an aberration and not the norm at BharatPe and went on to defend the board, which he said had famous names in the banking and financial services industries.

“Ashneer Grover, my co-founder, is no longer affiliated with BharatPe as an employee, founder or director of the company,” he wrote. “Ashneer submitted his resignation to the board late in the evening of March 1, 2022, minutes after receiving the agenda for the board meeting on the findings of the PwC report.” While he did not address the report’s findings, the company had stated last week that “the Grover family and their relatives were involved in extensive misappropriation of company funds, including but not limited to creating fake vendors through which they siphoned money off the company’s account and grossly misappropriated the company’s expense accounts to themselves to enrich and fund their lavish lifestyles.” In the letter, Mr. Nakrani said Mr. Grover had “attempted to create a false narrative about the company we built together with the right spirit.” “Although the contents of the investigative report are confidential and I, as a board member, am not at liberty to share its results I am proud that our board acted quickly and decisively to maintain good governance,” he said.

Mr. Grover currently owns a 9.5% stake in BharatPe while Nakrani owns 7.8%. Investor Sequoia Capital India is BharatPe’s largest shareholder with a 19.6% stake, followed by Coatue with 12.4% and Ribbit Capital with 11%.

In response to BharatPe’s decision, Mr Grover said last week he was appalled but not surprised by the personal nature of the company’s statement.

“It comes from a position of personal hatred and low thinking,” he had said. “I’d like to know who from Amarchand, PwC and A&M started conducting an audit of the ‘wasteful’ of one’s lifestyle?”

Mr Grover had also questioned the role of former SBI chairman Rajnish Kumar, an independent board member of BharatPe.

Mr Nakrani defended the board, saying it was made up of famous names from across the banking and financial services industries who “have provided tremendous support during these challenging times”.

“Now is the time to stop rumors and innuendo from distracting us and get back to building,” he said. “Time to do what we have done in the past and will do best. We owe it to the amazing team that works here, to our shareholders and to this remarkable country for helping us thrive.”

BharatPe, which has hired a law firm and risk consultants to conduct a more detailed investigation into allegations of financial irregularities, last month fired Madhuri Jain, head of controls and Grover’s wife, over alleged financial irregularities, including using the company’s funds for personal visits abroad , beauty treatments, buying electronics, and paying helpers who work in their household.

Mr Grover, who was put on a two-month leave of absence on January 19 following allegations of the use of abusive language against Kotak Mahindra Bank employees and fraudulent practices, had filed a claim for arbitration with the Singapore International Arbitration Center (SIAC), alleging the company’s investigations against him were illegal.

The Emergency Arbitrator (EA) dismissed all five Grounds of Appeal and denied him a single remedy.

Speaking about the business, Mr. Nakrani said that the fintech company, whose foundation was laid in a small hostel room at IIT Delhi, has seen exponential growth.

“We have an annualized TPV run rate of $16 billion (£1.2 billion). Our dealer lending vertical is growing well; we have seen phenomenal growth and initial success at Postpe and are on the verge of surpassing £1,000m in payouts 5 months after launch; Payback delivers great numbers and has a lot in store.

“Our company’s revenue for the current financial year is expected to be four times higher than last (our revenue has already exceeded £700m a year),” he said.

He explained that BharatPe was the first fintech in India to be given the opportunity to build a bank and said that the next chapters of success would be based on the pillars of trust, integrity, transparency and teamwork.

“I am personally committed and look forward to leading this next phase of growth with you all. We continue our vision of being the one stop shop for the financial needs of merchants and consumers in India,” he said.

Going forward, BharatPe will invest much more energy to bring millions of small traders and new borrowers into the formal economy’s purview by helping them access low-cost loans and other financial services.

“Also, we will continue to focus our energies on building India’s first truly digital bank!” he added. “We have experienced a crisis, but we will turn it into an opportunity, we are resilient!”

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