Byju’s Case: EY on Corporate Affairs Ministry’s radar, stern action likely, say sources

The Ministry of Corporate Affairs (MCA) is closely monitoring EY’s role in Byju’s insolvency case and may initiate an investigation, sources revealed. The development follows whistleblower allegations raising serious concerns over EY’s conduct in the Corporate Insolvency Resolution Process (CIRP) of Byju’s. The Serious Fraud Investigation Office (SFIO) may also step in to probe potential fraud in the process.

Byju’s Case: Whistleblower allegations

A whistleblower from Ernst & Young (EY) India has reportedly exposed a major corporate corruption case involving Byju’s insolvency. According to the whistleblower, Dinkar Venkatasubramanian of EY India allegedly managed Byju’s insolvency proceedings on behalf of GLAS Trust, violating the Insolvency and Bankruptcy Code (IBC), 2016.

The whistleblower claims to have 30GB of evidence, including emails from the interim resolution professional’s (IRP) official ID, suggesting collusion between GLAS Trust and EY. Think & Learn, Byju’s parent company, was admitted to insolvency on July 16, 2024, despite GLAS serving as its advisor for over two years.

Byju’s Insolvency Case​: Alleged manipulation in CoC formation

The leaked documents indicate misconduct in the formation of Byju’s Committee of Creditors (CoC). The allegations include:

• EY’s Dinkar Venkatasubramanian was proposed as the IRP for Byju’s insolvency.
• GLAS Trust Company LLC activated Dinkar immediately after Byju’s insolvency admission on July 18, 2024.
• Pankaj Srivastava, the appointed IRP, delegated the entire process to Dinkar, leading to conflicts of interest.
• Claims submitted to the IRP were vetted by Dinkar and his EY team, raising concerns about transparency.
• On July 31, 2024, a settlement was reached with BCCI, but the IRP delayed submitting the withdrawal to NCLT.
• A CoC was formed, including GLAS, despite the settlement being finalized earlier.
• ICICI Bank distanced itself from the CoC, citing potential manipulation in the process.

The whistleblower has called for an investigation into the roles of EY, GLAS and the IRP, highlighting the impact on Indian employees and creditors.

Suppression of conflict of interest

Further revelations indicate that when IRP Pankaj Srivastava appointed EY as a support entity, he inquired about potential conflicts of interest. EY denied any conflicts, despite having previously advised Byju’s on multiple mandates. The whistleblower’s report provides evidence contradicting EY’s claims, further raising questions about transparency in the insolvency proceedings.

Zee Business reaches out to EY

Zee Business reached out to EY for a response regarding these allegations, but the firm did not reply to the email. With mounting concerns and regulatory bodies stepping in, the case is likely to see further scrutiny in the coming weeks.