Why BharatPe needed to hire PwC to oust Ashneer Grover

moneycontrol.com:

The BharatPe board’s decision to rope in accounting firm PwC for an independent audit is a step towards terminating the services of co-founder and managing director Ashneer Grover and his wife Madhuri Jain Grover, as their ouster can only happen after a report by a Big 4 audit firm indicts them, people familiar with the development told Moneycontrol.

“The share purchase agreement says the board can terminate the services of Ashneer and Madhuri but they need a certificate from one of the Big Four firms to say a fraud has happened and that is why PWC has been hired,” said one of the persons.

While the share purchase agreement is a private document, Moneycontrol accessed BharatPe’s 2021 articles of association (AoA) which briefly mentioned the role of one of the top four accounting firms when decisions like this were required to be taken.

“...gross negligence or wilful misconduct by such founder, as determined by a Big 4 firm, which does not have any relation with the company, after which the board shall, through a simple majority, take a decision on such cause event based on the report shared by the appointed Big 4 firm after following principles of natural justice,” reads the AoA.

In an interaction with Moneycontrol last week, Grover also mentioned that the board was arm-twisting him into exiting the company.

This is the reason Deloitte, the statutory auditor that has been auditing BharatPe since 2019, has been kept at an arm’s distance for this exercise. However, it will continue to be the statutory auditor of the company till 2024.

This comes even as a management consultant and risk advisory firm Alvarez and Marsal is conducting a full-scale governance review. While BharatPe did not comment for this story, it had earlier