GST fraud probe into BharatPe finds deals with non-existent vendors

FILE PHOTO: Federal appeals court judges L-R: Raymond Kethledge, Brett Kavanaugh, Amy Coney Barrett, and Thomas Hardiman, being considered by President Donald Trump for the U.S. Supreme Court, are seen in this combination photo from files. REUTERS/File Photos

An audit conducted by professional services firm Alvarez and Marsal confirms fintech firm’s dealings with fake or non-existent vendors.

The Directorate General of Goods and Services Tax Intelligence has widened its probe on BharatPe after its earlier investigation had found the merchant-focused fintech firm had issued invoices to non-existent vendors, said officials aware of the development.

Last October, BharatPe had accepted that it had issued invoices to non-existent vendors and paid about Rs 11 crore in dues and penalty to the tax department.

An audit conducted by professional services firm Alvarez and Marsal had pointed out the fintech firm’s dealings with fake or non-existent vendors. This was based on DGGI’s finding that procurements were done by the company from non-existent vendors or those who did not operate at the principal place of business.

The fintech firm, through its representative, Deepak Gupta, brother-in-law of Madhuri Jain, wife of BharatPe co-founder Ashneer Grover and former head of controls at the company, had agreed that some of its vendors did not exist.

These fake or non-existent vendors provided recruitment as well as other services to BharatPe. Data of such vendors as well as those where invoices have been inflated has been sought by DGGI, said another official.

Also, the audit by Alvarez and Marsal had recommended to BharatPe’s board that the issue requires deeper investigation on why the firm was dealing with such vendors. This is learnt to have further tipped off the DGGI, and the investigative wing under the Central Board of Indirect Taxes and Customs (CBIC), and it is digging deeper in the company’s practices.

A spokesperson for BharatPe said the company is cooperating with the tax authorities and sharing all the information sought.

BharatPe has been at the centre of a governance lapse fiasco that came to light after Grover got into a legal tussle with Kotak Wealth Management over not being able to secure financing to bid for the initial public offering (IPO) of Nykaa.

Grover, soon after, went on voluntary leave of absence and a series of events led to boardroom upheaval at the fintech firm.

Madhuri Jain was named in the ongoing audit of BharatPe for allegedly inflating bills as well as issuing invoices to non-existent vendors. On Wednesday, BharatPe sacked her over alleged fraud and embezzlement. Following the move, Jain posted video clips of BharatPe employees allegedly consuming alcohol in company premises and called the company’s board “chauvinistic”.

Source: Read Full Article