Corporate Affairs Ministry may look into EY on whistleblower’s allegation of manipulation in Byju’s insolvency case

The Ministry of Corporate Affairs may look into a whistleblower’s allegation against accounting firm EY in a case related to education tech startup Byju’s insolvency process. The whistleblower has come forward with allegations, claiming that the insolvency process of Byju’s was manipulated by US-based lender GLAS Trust with the collusion of EY India and Interim Resolution Professional (IRP) Pankaj Srivastava.

A source close to development told Zee Business: “MCA may ask regional director or transfer this case to the Serious Fraud Investigation Office (SFIO) for looking into the allegation of whistleblower.”

Last year, a regional director at Byju’s submitted an investigation report against the startup. 

The source also said that the Ministry of Corporate Affairs “may ask the regional director to expand their scope of investigation as new claim emerged in this case”.

According to the whistleblower, GLAS—working closely with EY’s Dinkar Venkatasubramanian—had distorted the entire insolvency process, reducing India’s Insolvency and Bankruptcy Code (IBC) to a “mere joke”. 

The IRP allegedly acted as a rubber stamp while key insolvency decisions were taken by EY officials, who were covertly managing the process.

The whistleblower claims to have revealed that both GLAS and EY deliberately concealed their prior affiliations with Byju’s and its lenders, enabling them to manipulate the insolvency process unchecked. 

Despite EY having worked with both Byju’s and GLAS for over two years, the firm falsely declared in its disclosure statement to the IRP that it had no prior associations with either party. This misrepresentation allowed EY to secure a formal role in the insolvency proceedings while covertly controlling key decisions on behalf of GLAS.

Similarly, GLAS, which had been working closely with EY on Byju’s financial restructuring well before the insolvency, failed to disclose this relationship, raising serious concerns about conflict of interest and procedural integrity. 

The whistleblower emphasises that this intentional suppression of prior engagements facilitated a scenario where GLAS, through EY, was effectively verifying its own claims and steering the insolvency process to its advantage, sidelining genuine stakeholders in the process.

However, the most alarming revelation by the whistleblower was how a legitimate settlement was deliberately derailed to keep Byju’s in insolvency. After Byju’s co-founder Riju Ravindran cleared outstanding dues with the BCCI on July 31, 2024, the BCCI promptly submitted a withdrawal request on August 16. Yet, the IRP failed to file the CIRP withdrawal application within the stipulated time. Instead, at GLAS’ behest, he delayed the process, enabling the formation of a Committee of Creditors (CoC) on August 21, thereby transforming what should have been a pre-CoC settlement into a post-CoC settlement. 

This technical manoeuvre kept Byju’s in bankruptcy, allowing GLAS to maintain control over its assets.

Notably, the whistleblower also highlighted that ICICI Bank, which had never filed a claim, was inserted into the CoC to give it an illusion of legitimacy but later withdrew, exposing the manipulation. Meanwhile, GLAS allegedly pressured the IRP into executing questionable and potentially illegal actions, leading to a fallout when Srivastava demanded proper documentation from GLAS to substantiate its creditor status.

The whistleblower warns that EY was manoeuvring to keep control by pushing for Shailendra Ajmera, another EY partner, to take over as Resolution Professional (RP). This has now become a reality, with Ajmera’s appointment ensuring EY retains its grip on Byju’s insolvency process.

Adding to the controversy, the whistleblower alleges that Employees at EY reportedly laughed at desperate pleas from Byju’s staff regarding unpaid salaries, while GLAS actively sought court intervention to block salary payments to teachers.

The revelations, backed by emails and internal documents, paint a disturbing picture of a foreign lender manipulating India’s legal system to its advantage. With EY’s continued involvement despite these disclosures, serious questions now arise about the integrity of the insolvency proceedings.

At the time of publishing this report, Zee Business’s queries emailed to EY and the Ministry of Corporate Affairs remained unanswered. 

As Byju’s employees, creditors, and stakeholders await clarity, this whistleblower’s account raises urgent calls for a thorough investigation into the handling of the company’s insolvency.