NEW DELHI | BENGALURU: A forensic audit commissioned by German ecommerce investor Rocket Internet has unearthed several apparent corporate governance violations by former top executives at its fashion portal Jabong The preliminary findings by forensic auditor Pricewaterhouse-Coopers in Sweden were communicated to Rocket Internet-backed Global Fashion Group unit (Jabong is part of this group along with four other emerging-markets companies) on January 15.The interim summary of the investigation, codenamed Project Flush, was provided to ETby the operator of the Twitter handle ‘Unicon Baba’.A frequent commenter on the startup ecosystem, the anonymous ‘Unicon Baba’ has a track record of tweeting accurate inside information about startups.Jabong’s former managing director Praveen Sinha, the company’s ex-CEO Arun Chandra Mohan and former Rocket Internet India managing director Heavent Malhotra are the individuals investigated by Rocket after allegations of financial impropriety were made by a whistleblower in August 2015, the report said.Sinha and Mohan left Jabong around the same time. The report found “conflict of interest” on the part of Sinha in one of the main aspects of the investigation,the alleged fraudulent transfer of Jabong’s logistics unit to an entity controlled by Sinha.Shares in the unit, Gojavas, were later sold to Jasper Infotech, the company which runs online marketplace Snapdeal The report also found that Sinha, Mohan and Malhotra had interests in third parties trading with Jabong, and that the allegation of “collusive trading is partly supported, at least to the extent that conflict of interest situations apparently exist.” Sinha denied any wrong doing.PwC and Global Fashion Group did not reply to requests for comment. GoJavas confirmed an internal investigation, which it said concluded that “no value transfers” had transpired.“All relevant parties had met on this matter and concluded that no value transfer has happened and hence all matters referred in the alleged report stand closed,” the company said in a statement.Snapdeal’s replies to ET did not address questions relating to the investigation, but contained a business justification for its decision to invest in Gojavas. The investigation comes in the backdrop of sale talks involving Jabong as well as Gojavas.Snapdeal has been reported to be the frontrunner in talks to acquire Jabong. It intended as recently as last week to buy out Gojavas completely but that plan seems to have run into trouble after the logistics company walked out of negotiations.For Berlin-based Rocket Internet, whose model is to incubate copycats of successful internet businesses in the US, the developments at Jabong follow the fiasco at food delivery marketplace Foodpanda where too there were allegations last year of corporate governance failures.Fabfurnish, an online furniture retailer it incubated, was sold to the Future group earlier this month for an estimated Rs 20 crore. Gojavas (formerly Javas) was launched in December 2012 as a unit of Jabong’s business-to-consumer corporate entity known as Xerion Retail.Gojavas was transferred within a few months to an entity called Quickdel in which Sinha later came to own a 50 per cent stake. He and other promoters later sold shares to Snapdeal, which now owns a 42% stake in Gojavas.FDI rules meant that the investment by Rocket Internet happened Probe Red-flags Corporate Governance at Jabong in Jabong’s business-to-business entity known as Jade, because of which it apparently lost out on any benefits from transactions involving Gojavas.The report said that in August 2015, Oliver Samwer, one of the founders of Rocket Internet, wrote to Sinha and Mohan expressing concern about “not getting the share we should own” and threatening legal action against “everyone involved in stealing this business from us.”The report also raised questions about the transactions between Jabong and an entity called Value Shoppe Retail. PwC investigators found that a person listed as an employee at Jabong was also a director at Value Shoppe.The address for Value Shoppe was the same as the address for Xerion, the B2C entity of Jabong.The report questioned the rates at which unsold inventory was disposed of as scrap to Value Shoppe as well as steep discounts at which factory seconds were sold to the same company.