Deloitte Steps Down as Adani Ports' Auditor Amid Transaction Concerns
In a development signaling heightened scrutiny over flagged transactions, global auditing firm Deloitte has chosen to step down as the auditor of India's Adani Ports. This move follows a series of concerns stemming from transactions highlighted in a report by U.S. short-seller Hindenburg. Deloitte's decision not to independently investigate the flagged transactions underscores the complexity of the situation.
In May, Deloitte had issued a qualified opinion on Adani Ports' financials, pointing to specific transactions that had drawn attention in Hindenburg's report. A qualified opinion serves as an indicator of reservations expressed by a company's auditor. This latest development casts renewed uncertainty over the financial practices of Adani Group, a conglomerate that has found itself at the center of allegations raised by Hindenburg. These allegations encompass assertions of improper utilization of tax havens, intricate related party transactions, and the group's indebtedness, contentions vehemently refuted by the conglomerate.
Since the release of Hindenburg's report, Adani Group's market value witnessed a sharp decline of approximately $150 billion. However, subsequent measures to address its debt obligations and rebuild investor trust have led to a partial recovery.
Deloitte's decision to resign as Adani Ports' auditor follows its request for the company to undertake an independent inquiry into the flagged related party transactions, a proposal that Adani Ports reportedly declined to pursue.
Both Deloitte and Adani Ports have not yet responded to inquiries from Reuters seeking comment on this matter.
Sources indicate that Deloitte's resignation from its role as Adani Ports' auditor is likely to take effect as early as Monday, further highlighting the urgency and seriousness of the situation.
In a related development, an appointed panel stated in May that India's regulatory body for markets had encountered difficulties in its investigations into allegations against the Adani Group. The panel's findings suggested that further pursuit of the case might be an endeavor without a clear resolution. Subsequently, last month, Gautam Adani, Chairman of Adani Group, characterized Hindenburg's report as a "malicious attempt" aimed at tarnishing the conglomerate's reputation. He emphasized the group's confidence in its governance and transparency standards, citing the panel's findings that identified no lapses.