Deloitte steps down as statutory auditor of Adani Ports and Special Economic Zone after it highlighted concerns over report by Hindenburg Research
By MYBRANDBOOK
Deloitte has stepped down as auditor of the Adani Group’s port company. The company is run by billionaire Gautam Adani and according to him the auditor wanted a wider remit over other firms in the conglomerate following the report of a U.S.-based short seller. This happened weeks after Deloitte raised concern over certain transactions flagged in the report on the Adani Group by Hindenburg Research.
Adani Ports and Special Economic Zone (APSEZ) in a statement has confirmed the resignation of Deloitte and the company has also appointed MSKA & Associates as the company’s new auditor.
Since 2017, Deloitte has been the auditor of APSEZ. In July 2022, it was given another five-year term.
"In Deloitte's recent meeting with APSEZ management and its Audit Committee, Deloitte indicated a lack of a wider audit role as auditors of other listed Adani portfolio companies. The Audit Committee was of the view that the grounds advanced by Deloitte for resignation as Statutory Auditor were not convincing or sufficient to warrant such a move," APSEZ said.
APSEZ conveyed that it was not within the remit of the firm and its Board to recommend group-wide appointments as other listed Adani portfolio companies are completely independent, with separate boards, executive teams, and minority shareholders.
"Following this, Deloitte was not willing to continue as APSEZ's statutory auditor and, therefore, it was agreed to amicably end the client-auditor contractual relationship between APSEZ and Deloitte," the company said.
In May Deloitte Haskins & Sells LLP highlighted three transactions which includes recoveries from a contractor identified in the Hindenburg report, in issuing a qualified opinion on the accounts of APSEZ.
In the auditors' report on the audit of the fourth quarter and 2022-23 financials, Deloitte highlighted transactions with three entities, which the company said were unrelated parties.
Deloitte, however, said it could not attest to the company's statement as no independent external examination had been done to prove the claims.
Following this, it wanted a wider conglomerate-wide audit, which the Adani Group firm refused.
Hindenburg Research in its January 24 report that levelled allegations of fraud, stock manipulation, and money laundering against the Adani Group, had also flagged inadequate disclosures of related party transactions. The Adani Group has denied all allegations.
Deloitte had stated that the Adani Group did not consider it necessary to have an independent external examination of these allegations because of their evaluation and the ongoing investigation by the Securities and Exchange Board of India (SEBI).
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