New Delhi: Deloitte, a leading global audit and assurance provider, plans to resign as Adani Group’s port company auditor. This move comes weeks after it raised concern over certain transactions flagged in a report of a US short seller.
Sources who know the matter stated, “Deloitte Haskins & Sells LLP has communicated to Adani Ports & Special Economic Zone Ltd its decision to resign as auditor, and a formal announcement is expected shortly.”
Deloitte declined to comment about the reason for the resignation. In May, Deloitte had flagged three transactions, including recoveries from a contractor identified in the Hindenburg report, as it issued a qualified opinion on the accounts of Adani Ports & Special Economic Zone.
On the fourth quarter audit in the auditors’ report 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 has been done to prove the claims.
Hindenburg Research, in its January 24 report that levelled allegations of stock manipulation, money laundering and fraud, against the Adani group, had also flagged inadequate disclosures of related party transactions. Adani Group has declined all allegations.
Because of the Adani Group evaluation and the ongoing investigation by the Securities and Exchange Board of India (SEBI), the Group did not consider it necessary to have an independent external examination of these allegations, Deloitte had stated.
“The evaluation performed by the Group does not constitute sufficient appropriate audit evidence for our audit,” Deloitte said in a statement. In the absence of the independent external examination and the pending completion of investigation by SEBI, the auditor had said it could not comment if the company were fully compliant with the law and if the transactions flagged may result in possible adjustments and disclosures in the financial statement in respect of related parties.
In May, the Supreme Court appointed a six-member expert panel that found no regulatory failure or signs of price manipulation in the Adani Group stocks in its interim report.
The transactions flagged by Deloitte included engineering, procurement and construction (EPC) purchase contracts with a subsidiary of a party identified in the Hindenburg report.
Also, Adani Group “re-negotiated the terms of sale of its container terminal under construction in Myanmar” to Anguilla-incorporated Solar Energy Ltd. The sale consideration was revised from Rs 2,015 crore to Rs 246.51 crore, and an impairment charge was taken. The group told the auditor these were not related parties.
