At BharatPe, probe finds recruitment fraud and payments to fictitious firms

A preliminary investigation by an external specialist has highlighted two egregious instances of fraud at BharatPe, the merchant-focussed fintech firm hobbled in recent weeks by the cloud of controversy over its co-founder Ashneer Grover.

Grover's wife and the firm's controller till recently, Madhuri Grover, is linked to both the fraudulent schemes.

The report by Alvarez and Marsal, a risk advisory firm, is dated 24 January and was submitted to the BharatPe board. Mint reported on 30 January that the board had arrived at a decision to terminate the services of Grover based on the preliminary report, even as it has commissioned a comprehensive report.

The allegations of financial wrongdoing are on two major grounds. One is the irregularities in recruitment and second revolves around paying non-existent vendors. Madhuri Grover had been serving as head of control at BharatPe since incorporation and headed procurement and admin departments.

The Grovers and BharatPe have not responded to requests for comment at the time of publication.

BharatPe used to pay recruitment fees to HR consultants for employees recruited through them. The investigation has found that the company was recruiting staff but fraudulently paying a network of staffing companies that had nothing to do with the hiring and appear to be linked to each other as well as to Madhuri Grover.

A&M reviewed the invoices of fees paid to these consultants. The employees confirmed their date of joining as stated in the vendor invoice. But they denied being recruited through the stated consultants or any knowledge of them.

It at least three instances, A&M noted that Madhuri Grover had directly received the invoices from the vendors and forwarded these to the accounts team for payment.