BharatPe to reclaim ESOPs from Madhuri Jain, wife of co-founder Ashneer Grover

By Arti Singh

  • 23 Feb 2022
Credit: 123RF.com

BharatPe is set to claw back stocks from the head of controls, Madhuri Jain, wife of embattled co-founder Ashneer Grover, for allegedly committing fraud at the fintech unicorn, a person with direct knowledge of the matter said.

Jain, who was among 15 employees fired by BharatPe last month, was questioned by company investigators and lawyers for close to six hours last week, said a second person. Both the people requested anonymity.

“The investigators are understood to have reached a decision regarding her role in the so-called financial fraud. Therefore, the equity is getting clawed back under the provisions of Articles of Association (AoA),” said the first person. 

Jain and BharatPe did not immediately respond to a query seeking comment. 

The latest move comes after Alvarez and Marsal’s last month found prima facie instances of fraud at BharatPe. The report prepared by the consultant highlighted two kinds of fraud at the fintech firm—first, irregularities in recruitment and, second, payments made to non-existent vendors. Jain, who had headed BharatPe’s procurement, administration and human resources departments since 2018, is allegedly linked to the frauds.

The company’s AoA reviewed by Mint, allows removing a founding partner if there is a ‘cause’ such as gross negligence or willful misconduct as determined by a Big Four accounting firm.  According to AoA, the company can also repurchase equity at a fair market value. Which is the reason why BharatPe hired PwC as a second investigator.  

To be sure an employee can be sacked under the terms of employment contract if found to be negligent and indulging in misconduct. "The decision to fire Jain was based on a report prepared by PwC, one of the Big Four accounting firms," the person said.

“Her stocks are likely to be clawed back since now the firing is with a ‘cause’. The company is expected to intimate Jain early this week and come up with an official statement soon on this,” the person added. 

Also under investigation are Jain’s brother-in-law, Deepak Gupta, and her brother Shwetank Jain. 

The PwC report on Jain, Gupta and Shwetank Jain has been submitted, while the investigation on Ashneer is still ongoing,” the person added. 

Shwetank Jain and Gupta could not be reached for comment. 

In a meeting of BharatPe’s board in January, Grover said that his wife Jain would resign. However, the board declined the offer as it was the management’s prerogative to decide on it, the second person said.

“Jain is an employee. Her offer to resign has to be tabled before the management,” said this person.

On 30 January, Mint reported that BharatPe asked 15 employees, including Jain, to leave the company amid a preliminary internal investigation that indicated financial fraud. 

For this, Grover, Jain and five others (relatives of the couple, all of whom were not employees) were being investigated.