Adani Group used 11-employee firm to audit businesses worth $100B


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Adani Group used a tiny auditing firm with just 11 employees — some as young as 23 — to review finances at two key subsidiaries with a combined value of $100 billion, according to bombshell allegations from short-seller Hindenburg Research.

As of Thursday, billionaire Gautam Adani’s business empire has lost a whopping $108 billion in value since Hindenburg accused him on Jan. 24 of overseeing “the largest con in corporate history.” The India-based conglomerate was forced to abandon a planned $2.5 billion share sale this week.

One of the key “red flags” raised by Hindenburg about Adani Group’s alleged subpar governance concerned its use of the firm Shah Dhandharia, which conducted audits for the flagship Adani Enterprises and Adani Total Gas.

Based out of an office in the Indian city of Ahmedabad, the firm used auditing partners who “were as young as 24 and 23 years old” to approve annual audit reports at the two subsidiaries, according to Hindenburg, which obtained and published copies of IDs and government records confirming their ages.

“They were essentially fresh out of school, hardly in a position to scrutinize and hold to account the financials of some of the largest companies in the country, run by one of its most powerful individuals,” Hindenburg said in its report.

Gautam Adani is one of the world’s richest people.
Bloomberg via Getty Images

Hindenburg said the auditing firm’s website went offline in the middle of its investigation. The firm purportedly works out of a small office and paid the equivalent of $435 in monthly rent in 2021.

Shah Dhandharia’s website is no longer active, but archived versions of the page listed just four partners among the firm’s 11 employees. Additionally, Hindenburg said it found a record of just one other client that had enlisted Shah Dhandharia’s services – a small company called Globe Textiles with a valuation of less than $8 million.

Shah Dhandharia
A picture of Shah Dhandharia’s offices referenced in Hindenburg Research’s report.
Shah Dhandharia

The influential short-seller said it had uncovered “brazen accounting fraud, stock manipulation and money laundering” at Adani stretching back over “decades.” Hindenburg said its findings were based on a two-year investigation.

Gautam Adani’s personal fortune has plunged to $62 billion from $125.5 billion since the HIndenburg report — sinking him from No. 3 on Forbes’ list of the world’s richest people to No. 17 as of Thursday. Once Asia’s wealthiest man, Adani has been surpassed on the list by India’s Mukhesh Ambani.

Hindenburg asked Adani Group to answer 88 questions about its practices – several of which concerned its used of Shah Dhandharia for auditing services.

“Given the complexity of Adani’s listed companies, with hundreds of subsidiaries and thousands of interrelated dealings, why did Adani choose this tiny and virtually unknown firm instead of larger, more credible auditors?” Hindenburg asked.

Shah Dhandharia
Hindenburg said it could find evidence of just one more company that had enlisted Shah Dhandharia.
Shah Dhandharia

Adani Group fiercely defended its decision to hire Shah Dhandharia as part of a sweeping 413-page rebuttal to Hindenburg’s report.

“All these auditors who have been engaged by us have been duly certified and qualified by the relevant statutory bodies who are responsible to determine these benchmarks,” Adani Group said in its response. “All our auditors have been appointed in compliance with applicable laws.”

“The financials and public documents of the Adani portfolio entities clearly disclose Shah Dhandharia & Co as our auditor to all regulators and stakeholders and hence, it is unclear what new findings are being brought to light by Hindenburg,” the company added.

Adani Group also accused Hindenburg of showing a “brazen disregard of persona privacy and safety” by publishing information about Shah Dhandharia, including photos of their IDs.

Shah Dhandharia
Shah Dhandharia listed just 11 employees on its website.
Shah Dhandharia

Separately, Adani Group Chief Financial Officer Jugeshinder Singh slammed Hindenburg during an interview with India-based media outlet Business Today.

“Do you think as a large Indian corporate we have no responsibility to develop Indian vendors? We have no responsibility towards developing the Indian institutional framework?” Singh said.

“So, if we support the development of a small firm to become a proper, good, accounting firm, how is that a bad thing? Is it not our responsibility? We have 21,000 small vendors,” Singh added.

Adani Group
Adani Group entities have lost more than $100 billion in value since Hindenburg’s allegations surfaced.
Bloomberg via Getty Images

The company has dismissed Hindenburg’s allegations of shoddy accounting and other misdeeds as baseless and threatened to pursue legal action against the short-seller.

In a sharp response to Adani’s 413-page report, Hindenburg noted that the company had failed to address 62 of its 88 specific questions.

“Fraud cannot be obfuscated by nationalism or a bloated response that ignores every key allegation we raised,” Hindenburg said.

The Post has reached out to Shah Dhandharia, Adani Group and Hindenburg Research for further comment.

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