InfoEdge, the parent company of Naukri.com and other websites, has reportedly initiated a forensic audit of 4B Networks in which the company holds a stake. According to a report in leading startup news portal Inc42, Broker Network burnt over Rs 280 crore in less than 18 months, while over 150 employees have not been paid since November last year.
Why is InfoEdge conducting forensic audit?
A report by Economic Times states that Info Edge has initiated the audit after Rahul Yadav failed to disclose details of financial transactions and related-party activities when asked by the investors.
InfoEdge in an exchange filing said that Deloitte will conduct the forensic audit of the property-tech startup. Allcheckdeals India Private Limited a subsidiary of InfoEdge had invested approximately Rs 288 crore as funding, Rs 276 crore as investment into shares and Rs 12 crore as debt funding.
AIPL sought information, including details and particulars of financial transactions, transactions with related parties and such other aspects, from 4B Networks and its current management.
"However, 4B Networks has repeatedly failed to provide AIPL with such information and has also not responded to the information requests by the company on several occasions," according to an exchange filing by Indo Edge.
"AIPL has exercised its contractual rights under the shareholders' agreement and articles of association of 4B Networks and pursuant to the same, is initiating a forensic audit into the affairs of the investee company," the filing further read.
Founder Rahul Yadav continued to maintain luxurious lifestyle
According to Inc42, Broker Network (operated by 4B Networks) founder Rahul Yadav reportedly maintained a luxurious lifestyle such as owning a Mercedes-Maybach and hired a boardroom at the Taj Land's End for Rs 80,000 per day, as employees were left unpaid for months.
"Yadav turned to his long-time employees to borrow personal loans to pay employee salaries. One such top-level employee lent close to Rs 50 lakh to Yadav. He has filed a criminal complaint against Yadav," the report noted, citing sources.
Other employees were also asked to take "advance salary" loans and transfer the amount to Yadav.
Employees alleged that all through this, Yadav maintained a luxurious lifestyle.
"Yadav told us luxuries such as his Maybach came from his earnings at Anarock," and he was "also looking to buy a Bentley," one employee was quoted as saying.
Previous cases
The startup ecosystem has been rocked by several such cases in the past, including BharatPe Co-founder Ashneer Grover, Singapore-based fashion startup Zilingo founder Ankiti Bose and financial discrepancies at GoMechanic.
With inputs from Agencies.
