BharatPe ready for preliminary govt probe, to comply with law, say sources

After reports surfaced that government regulators may expand their probe into BharatPe's financial books after the Ashneer-Madhuri Grover saga that rattled the startup ecosystem, sources close to the developments said on Thursday that the fintech platform has not received any government notice to date and would fully comply with the law of the land, in case the need arises.

BharatPe has already conducted a thorough internal governance review via Alvarez and Marsal, a leading management consultant and risk advisory firm, and global audit firm PwC into the financial irregularities at the firm during Ashneer-Madhuri's tenure.

The company sacked Madhuri Jain after the probe found misappropriation of funds during her time as head of controls, while Ashneer quit as BharatPe accused him, his wife and their relatives of being engaged in extensive misappropriation of company funds and grossly abusing company money to fund their lavish lifestyles.

Reliable sources told IANS that the company is set to join any preliminary probe by the Ministry of Corporate Affairs (MCA) and will fully cooperate with the authorities to ensure they have all the required information.

The company "highly respects and abides by the law of the land and will fully cooperate with the authorities concerned", if required, the sources added.

Reports also surfaced that the Goods and Services Tax (GST) officials have expanded their probe into the company, trying to find out if fake invoices were used in the last four years across services during co-founder Ashneer's tenure as managing director.

Sources told IANS that the GST probe, which started in October last year, is ongoing.

The GST probe team is currently scanning the books of accounts of BharatPe, which was founded in April 2018, and is expected to submit its report in two weeks' time.

The latest development comes after a fresh controversy erupted regarding the fintech company's original founder Bhavik Koladiya and his stake in the firm.

According to sources, Koladiya, convicted in a credit card fraud case in the US in 2015, is believed to have split his holding between Ashneer and another co-founder, Shashvat Nakrani.

Till about 2018, Koladiya held over 30 per cent stake in the company, but this was diluted as the fintech company received more funding.

His stake in BharatPe was distributed between Ashneer and Nakrani. Ashneer has 8.5 per cent stake in the company, while Koladiya's would be around 4 per cent of this figure. There was a similar agreement between Koladiya and Nakrani as well.

Currently, the company's key investors are Sequoia Capital that has nearly 19.6 per cent stake, Coatue has 12.4 per cent stake, Ribbit Capital has 11 per cent, and Beenext 9.6 per cent stake, among others.

Sources had earlier told IANS that Bhavik and Ashneer have to personally sort out their stake among each other and the BharatPe board will not intervene in this.

--IANS

na/arm