Dhaka, Bangladesh (CNN) -- Nobel Laureate and microfinance pioneer Muhammad Yunus faced a new government fight Monday as the Cabinet ordered "legal action" against him for what it called "tax irregularities."
The Cabinet meeting, led by Prime Minister Sheikh Hasina, discussed a report prepared by the National Board of Revenue that claimed it had found tax irregularities by Yunus between 2004 and 2011, said cabinet secretary Mohammad Musharraf Hossain Bhuiyan at a briefing.
The allegations are related to his overseas earnings of about $ 6.4 million, including award money and royalties from his books, and possible improper tax exemptions.
Yunus, who won the Nobel Peace Prize in 2006, however, denied the allegations in a news release issued by Yunus Center in Dhaka. It said the government was supposed to determine what earnings were taxable.
"Professor Yunus has done everything with the consent and approval of the governing body," it said. "Professor Yunus had brought all his overseas earnings through banking channels as per laws and showed them in his income tax return and paid all the applicable taxes."
The National Board of Revenue chairman, Ghulam Hussain, said on Monday the board would seek an explanation from Yunus and take legal action if the explanation was found to be unsatisfactory.
On Tuesday, the U.S. State Department urged the Bangladeshi government to treat Yunus "in a fair and transparent manner, in keeping with Bangladeshi law and the principles of due process."
This is not the first time that Yunus and the government have been at odds. In 2011, Bangladesh's central bank removed Yunus as managing director of Grameen Bank, citing a mandatory retirement age.
Yunus, 73, founded Grameen Bank three decades ago to reduce poverty in Bangladesh. The model of financing the extremely poor without requiring any collateral was replicated around the world.
Yunus was also awarded the U.S. Presidential Medal of Freedom in 2009 and a U.S. Congressional Gold Medal in April.