Deloitte planning to resign as Adani Ports’ auditor

Deloitte is planning to resign as auditor of Adani group’s port company, a move that comes weeks after it raised concern over certain transactions flagged in a report of a US short seller.

Photograph: Francis Mascarenhas/Reuters

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, sources with knowledge of the matter said.

The reason for the resignation was not immediately known.

Deloitte declined to comment.

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.

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 has been done to prove the claims.

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.

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).

“The evaluation performed by the Group does not constitute sufficient appropriate audit evidence for the purposes of our audit,” Deloitte had said in notes to APSEZ financial statement.

In the absence of the independent external examination and the pending completion of investigation by Sebi, the auditor had said it cannot comment if the company was fully compliant with the law and if the transactions flagged may result in possible adjustments and/or disclosures in the financial statement in respect of related parties.

The six-member expert panel appointed by the Supreme Court in May 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 (PEC) purchase contracts with a subsidiary of a party identified in the Hindenburg report.

Also, the 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 are not related parties.