Interestingly though, the firm told ET it hadn’t asked for Jain’s resignation. “ The board of BharatPe has never sought any resignation from Ms Madhuri Jain,” it said in a reply to ET’s queries. “Hence, the question of the board accepting her resignation does not arise. She was asked to go on compulsory leave of absence on January 20.”
ET has learnt through multiple sources that there was confusion between board members and BharatPe’s top management relating to Jain’s resignation. Managing director Grover offered the resignation of Jain, who reported to him, at a board meeting on January 19, several people told ET.
This has been recorded in the minutes of the board meeting, they said.
However, Grover had then said his decision to offer Jain’s resignation was “spontaneous” and that not all board members were in agreement with the proposal, said the people cited above. In a communication on BharatPe’s “minutes of meeting,” Grover said Jain’s resignation would be decided after his return to the company, sources added.
Subsequently, Jain wrote to the board that her “alleged” resignation was “rather astonishing and defies every known norm of corporate governance and propriety… Neither did I have any information about the same (alleged resignation), nor have I tendered any such resignation.”
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The “purported” resignation was accepted by the board “merely on account of my being Ashneer’s wife,” she said, adding, “I would like to take this opportunity to remind the board that I am the head of controls at the company, and that my role goes further than just being limited to being the wife of Ashneer.”
She did not elaborate in her email to the board on who had tendered the disputed resignation on her behalf. Jain said she would formally resign once she was exonerated “in a fair and independent review.”
ET has seen a copy of Jain’s letter. Jain and Grover did not respond to ET’s phone calls and messages. BharatPe board chairman Rajnish Kumar on Thursday said he wouldn’t comment on the company’s internal matters.
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A&M Probe
On February 10,
Jain had written to independent consultants Alvarez & Marsal (A&M) demanding an internal investigation into how the contents of its probe into the company’s financial practices were “leaked,” ET reported February 11.
A&M’s initial investigation report, dated January 24, showed that
Jain and members of her family were allegedly involved in financial irregularities at BharatPe, ET reported on February 4.
ET has also learnt that BharatPe chief executive Suhail Sameer informally sought Jain’s resignation on January 20, even before the initial report of A&M’s investigation was submitted, said people aware of internal discussions. This came during the same day as Jain was put on leave, following ‘alleged’ internal complaints against her, said sources.
This was around the time Grover had announced his
“voluntary leave” from the company until March 31.
“I want to end by saying that I have been treated in the most disrespectful manner by the board,” Jain wrote in her letter. “If this is the manner in which the company treats its female employees, I have no interest in continuing to be associated, in any capacity, with it. I would have willingly resigned, but for the fact that the integrity of not only myself but also my family members has been viciously attacked in the crossfire of what is evidently a shareholders’ dispute.”
Jain also alleged that the “governance review” currently being undertaken is a “roving enquiry” aimed at tarnishing her reputation and that she has been used as a “pawn” in a fight among shareholders.
Payback Purchase
The ongoing inquiry into BharatPe’s financial practices includes the acquisition — the first one it made — of
multi-brand loyalty platform Payback India in June last year, three people aware of the matter said.
While the deal was approved by the board, the scrutiny is over the Payback leadership team and Grover being former American Express executives — before BharatPe was founded.
Also, Payback India managing director and chief executive Gautam Kaushik joined BharatPe as group president in February 2021, four months before the closing of the Payback India deal, the people said. Kaushik, for reasons not linked to the deal, has now left the company.
Also being examined is whether BharatPe overpaid for the deal owing to the previous ties of the key stakeholders, said the people cited above. “I think Gautam joining before the deal closing is something under review as well, as is the price at which it was done,” one of them said.
While BharatPe didn’t disclose the financial terms of the deal at the time, it reportedly paid about $30 million.
“Board approval was of course there, but at what point they were informed about it has also been highlighted,” this person said, adding that several other financial practices of BharatPe, including its marketing spend, are under review. “These outcomes will also be crucial for what the final audit report will say, and that will decide the implications.”
According to the Articles of Association of BharatPe’s parent firm, for a cofounder to be terminated from the firm, a “cause” needs to be established,
ET reported February 8.
The cause could include the filing of a charge sheet against the person for an offence involving moral turpitude or fraud, resulting in material adverse effects on the company’s business. Wilful misconduct or gross negligence are also listed as causes for such an action. The reason needs to be certified by one of the Big Four audit firms that doesn’t have any relation with BharatPe.
