Byju's Probe, No Fraud, But Weak Governance Blamed For Losses

An investigation by the Ministry of Corporate Affairs has revealed lapses in Byju's corporate governance but found no evidence of financial fraud, as reported by Bloomberg on June 26.

The ministry's year-long investigation concluded that there were no signs of fund siphoning or financial account manipulation, according to sources familiar with the matter. However, it did identify governance issues that contributed to the startup's increasing losses.

The probe brings some relief to Byju's, temporarily halting further scrutiny by Indian officials on issues that have already been investigated. The investigation did not address whether founder Byju Raveendran was responsible for the governance lapses or if he remains fit to lead the company. In recent months, investors have called for his removal, citing management and compliance failures.

The government's probe highlighted that poor corporate governance and compliance practices, combined with changes in the funding environment, led to Byju's financial troubles. Investigators noted the startup's failure to hire professionals to manage finances and compliance, which exacerbated its financial issues.