NEW DELHI (Reuters) -India’s Adani Ports on Saturday said Deloitte’s reason for quitting as auditor of the company was “not convincing or sufficient to warrant such a move” and the global firm had all the necessary information it required to conduct the process.
Deloitte decided to resign from the role amid concerns over certain related party transactions flagged in a report by U.S. short seller Hindenburg in January, but the Indian company did not wish to look into them independently, a source told Reuters on Friday.
The auditor’s resignation has brought fresh scrutiny of the financial management at Adani Group, led by Indian billionaire Gautam Adani. The group has denied Hindenburg’s allegations made around alleged improper use of tax havens and other business dealings.
Commenting for the first time on the matter, Adani Ports said in a statement that in meetings with its leadership, Deloitte indicated concern over a lack of a wider audit role as auditors of other listed Adani companies.
However it was conveyed to the auditor it was not within the remit of Adani Ports to recommend such appointments as other entities are “completely independent”, the company said.
“The Audit Committee (of Adani Ports) 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,” Gopal Krishna Pillai, Chairman of the Audit Committee of Adani Ports, said in the statement.
“Deloitte was not willing to continue as … auditor and, therefore, it was agreed to amicably end the client-auditor contractual relationship,” he said.
Deloitte did not immediately respond to a request for comment. In its letter of resignation, contained in Adani’s stock exchange disclosure on Saturday, it said it was resigning with “immediate effect” as it was not the statutory auditor of a substantial number of other Adani Group companies.
“The company did not consider it necessary to have an independent external examination” of certain allegations, which were contained in the Hindenburg report, Deloitte wrote in the letter.
Deloitte first pointed out in May certain transactions flagged by Hindenburg and gave only a qualified opinion related to Adani Ports, indicating its concerns.
Adani Ports has named MSKA & Associates, an independent member firm of BDO International, as its new auditor, it said in the statement.
After the Hindenburg report, Adani group stocks lost about $150 billion in market value, but have since regained by around $50 billion after it paid debt and gained confidence of investors such as Australia-listed investment firm GQG Partners.
This month, Adani’s Ambuja Cements said it would buy a majority stake in smaller rival Sanghi Industries for up to $295 million, its first major purchase since the Hindenburg turmoil.
Source: Economy - investing.com
