Deloitte resignation: Not convincing reasons, says Adani

New Delhi: Before resigning as an auditor of an Adani Group firm, Deloitte had sought an independent external examination of allegations made by a US short-seller but the company said the allegations had no effect on financial statements and the reasons cited for quitting were not convincing to warrant such a move.

In a 163-page filing with stock exchanges relating to Deloitte Haskins & Sells LLP’s resignation, Adani Ports and Special Economic Zone (APSEZ) said 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, the firm conveyed to the auditor that it was not within its remit to recommend such appointments as other entities are “completely independent”.

“The Audit Committee (of APSEZ) 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,” said Gopal Krishna Pillai, former union home secretary and chairman of the Audit Committee of APSEZ, in a statement.

“Deloitte was not willing to continue as ... auditor and, therefore, it was agreed to amicably end the client-auditor contractual relationship,” he said.

In the August 12 resignation letter, Deloitte said it was resigning as auditor of APSEZ with immediate effect “because we are not statutory auditors of a substantial number of other Adani Group of companies.”

It went on to state that it had given a qualified opinion in audit of financial statements for quarters ended March 2023 and June 2023.

APSEZ appointed MSKA & Associates, an independent member firm of BDO International, as its statutory auditors in place of Deloitte, until the date of its next annual general meeting to be held in 2024, the company said in a filing.

Deloitte, which had been the auditor of APSEZ since 2017 and was in July 2022 given another five-year term, had in May first raised concern over certain transactions flagged in the report of Hindenburg Research.

These included recoveries from a contractor identified in the Hindenburg report. Hindenburg 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.

Adani Group has denied all allegations. “We requested the company to initiate an independent external examination of these allegations to determine whether these allegations may have any possible effect on the standalone financial statements of the company,” Deolitte said.

“The company represented to us that these allegations has no effect on the standalone financial statements of the company,” Deloitte said, adding that Adani refused any external independent probe on the Hindenburg report. (PTI)