India’s Enforcement Directorate, its crime-fighting agency, plans to issue a show-cause notice to Byju’s, alleging it violated the country’s foreign exchange rules, TechCrunch told TechCrunch a person close to the case.
The allegations, which ED plans to make public as early as Tuesday, will indicate that the Bangalore-based startup violated Foreign Exchange Management Act (FEMA) rules worth $1.08 billion. Indian television channel CNBC-TV18 was the first to report this development.
Impending show cause notice follows agency raid the premises of Byju’s and its founder Byju Raveendran end of April. The agency then declared that it had found and seized “compromising” documents and digital data on the company’s premises.
Byju’s said at the time that he was confident that the Enforcement Directorate would find that the startup, once valued at $22 billion, was compliant with all local laws. In a statement on Tuesday, a Byju spokesperson said the company had not received notice from the chief executive.
The ED’s allegation is the latest headache for the Bangalore-based startup, which has spent the last six months correcting several errors.
The startup, supported by Prosus, Peak XV, Sofina, BlackRock, UBS and Chan Zuckerberg Initiative, did not reach its revenue target for the financial year ended March last year, the startup revealed its much-delayed accounts this month.
Ajay Goel, CFO of Byju left the startup to return to Vedanta late last month, following the abrupt and high-profile departures of auditor Deloitte and three key members of Byju’s board of directors in June. Prosus, which owns more than 9% of Byju’s and is one of its first backers, publicly criticized the Bangalore-based startup in July for not having evolved sufficiently and for having ignored the investor’s advice and recommendations despite repeated attempts.