Deloitte flags Adani Ports transactions, citing lack of review

Adani Ports & Special Economic Zone Ltd’s auditor stated that insufficient disclosures about certain transactions mean it can only issue a qualified opinion on the company’s accounts, bringing the spotlight back to allegations made by short seller Hindenburg Research about Gautam Adani’s empire, stated bloomberg in its media report.

According to bloomberg, Deloitte Haskins & Sells LLP expressed concerns on Tuesday about the port unit’s transactions with three unrelated firms. However, the auditor stated that it was unable to certify that the parties were unrelated, and that the firm has declined to obtain an independent external assessment that would help prove this.

Deloitte stated that because “the evaluation performed by the group does not constitute sufficient appropriate audit evidence for the purpose of the audit,” it cannot comment on whether the company was completely compliant with local regulations, according to a Bloomberg report.

It’s the first time a top auditor has issued a qualified opinion on a portion of the empire’s accounts, citing claims from the US short seller report, which has knocked more than $100 billion off the group’s market value. The action could revive fears that disclosure gaps continue in the port-to-power conglomerate’s financial dealings, which could hinder its efforts to move past Hindenburg’s charges of widespread corporate fraud.

The Adani Group denied Hindenburg’s charges. It is awaiting the results of an investigation into suspected violations by the group by India’s market regulator, which must be completed by August 14 deadline. In its interim report, an expert panel formed by India’s highest court this month found no evidence of regulatory failure or price manipulation in Adani Group equities.

Court Probe of Adani Shortseller Saga Tests India’s Institutions.

Here are the three transactions flagged by Deloitte:

Adani Group signed an engineering contract with a subsidiary of a company named in the Hindenburg report and owed 37.5 billion rupees ($453 million) as of March 31. The group informed the auditor that this contractor is not a related party.

There have been financial transactions, including equity trades, with the persons named in the short seller report. According to Adani Group, these are unrelated parties. All payables were settled, and there were no outstanding debts.

Adani Ports sold its Myanmar port to Anguilla-based Solar Energy Ltd. earlier this month. The sale price was reduced from 20.15 billion rupees to 2.47 billion rupees, with an impairment charge imposed. The group informed the auditor that they are not related parties.
Source: Livemint