As reported yesterday, the interim summary of investigation conducted on former senior executives of Jabong had been leaked online by psuedonymous Twitter account holder ‘Unicon Baba’. He had floated a tweet(which was later deleted) saying that co-founder and CEO Praveen Sinha has been using the online fashion portal to siphon money for personal gains.
Sweden-based forensic auditor Pricewaterhouse-Coopers(PwC) had carried out the investigation after a whistleblower had made allegations of financial impropriety in August last year. But, Sinha has denied any allegation imposed on him and has also filed a legal case against the Twitter account holder for relaying damaging tweets on the Internet.
Sinha mentions that he has been unfairly accused of wrong-doing and in a statement to Mint, adds that,
Firstly, I have never been informed by Jabong’s investors of any PwC report. I came to know of it recently through a media query, to which I was not even given a day to respond. While it is very easy for any person/media to speculate and make false allegations, it is equally difficult for the subject of such allegations to prevent the damage and reputational loss he/she suffers on account of the same.
He further goes on to confirm that there was indeed an investigation, but it has been inconclusive of the fact that Sinha had laundered money from the company for any personal gains.
PwC Investigation
The Swedish finance auditor has been allegedly recognized to have investigated the former management and related-party transaction between Jabong and some of its vendors. The investigation revolves around Sinha, who apparently carried a fraudulent transfer of Jabong’s logistics unit — GoJavas — to an entity called Quickdel. This majority stake was later transferred to e-commerce retailer Jasper Infotech owned, Snapdeal.
According to people close to development, the interim probe continued for several months and a final report has now been submitted to the senior management at Global Fashion Group(GFG).
Moreover, PwC investigators also found that a Jabong employee was also a director at Value Shoppe. It found that unsold inventory and factory seconds at Jabong were disposed at questionable rates and steep discounts to Value Shoppe.
What’s important to notice that this development comes a time when Jabong and GoJavas were both available in the market for a acquisition, and were close to being bought out. Snapdeal had approached GoJavas to buy it out completely but reports now suggest that GoJavas has now walked out of the negotiations.
Sinha also comments on the ‘unfortunate’ timing of this leak and media outrage saying that,
As regards the timing of the release, it is indeed extremely unfortunate that this issue is being sensationalized at a time when multiple positive developments were shaping up for the companies in question. I hope these developments will not be adversely impacted by the false and baseless news reports. I am sending you these prefatory thoughts as I am currently travelling.
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