BharatPe’s former MD Ashneer Grover, who was recently slapped with a civil suit and criminal charges for cheating and siphoning off funds from the company he co-founded, has advised startup founders not to go by the Western concept of arm’s length and related party transactions.
In his new book Doglapan, he says there is nothing wrong in giving spouses a board position as they invest in founders’ success and will be a victim of their failure, like no one else.
“Just because your business has capital coming in from the US, you do not have to go by their concept of management – of not involving family in business,” he writes.
“To my mind, the concept of a related party transaction in India is totally irrelevant.”
Fintech unicorn BharatPe has in recent days taken three legal actions against Grover – filed a civil suit in the Delhi High Court, filed a criminal complaint with the Economic Offences Wing, and filed an arbitration for clawing back his restricted shareholding and founder title over alleged lapses and misdoings during his tenure.
His wife, Madhuri Jain Grover, was head of controls at BharatPe, and is one of the accused in the civil and criminal cases. Charges include creating fake bills, enlisting fictitious vendors to provide services to the firm, overcharging the firm for recruitment and using the company’s funds for personal use. Jain was fired for alleged misconduct.
“If I work with family, I will still give them the same rate as the market and will get the same deliverables. The added advantage that I may get is that a family member may work with me on a lower MOQ (minimum order quantity) or that they may take a credit risk on me.
“Being the capitalist economy that India is, everything in any case happens at arm’s length here – after all, dhanda, dhanda hai aur rishtedari, rishtedari (business is business and family is family); business and relations can be handled separately with the same individual,” he wrote in the book, saying there is need to be absolutely unapologetic about working with family.
Ashneer Grover believes spouses can be given co-founder titles and positions on the board. “If you choose to work with your spouse, there should be no hesitation in designating them as co-founders as well as giving them a seat on the board, by virtue of their capability but also of the fact that they are invested in your success and will be the victims of your failure, like no one else,” he wrote.
Grover resigned BharatPe on March 1, 2022, after being under investigation for the couple of months after an audio recording of him verbally berating a Kotak employee was leaked, and went viral. He claimed that he was forced out due to resentment of his popularity.
He holds about 8.5% stake in the company. Of this, 1.4% is not vested. BharatPe is seeking up to Rs 88.67 crore in damages.
(Additional information has been added to this PTI copy for context.)
