Adani Group will hire one of the ‘big four’ (Deloitte, EY, KPMG, and PwC) accounting firms to carry out a general audit, its partner TotalEnergies said in a statement on Friday. France-headquartered TotalEnergies has investments in several group companies of Adani like 50 per cent in Adani Total, 37.4 per cent in Adani Total Gas, and 19.75 per cent in Adani Green Energy Limited.
Following the serious allegations by US-based short-seller Hindenburg Research against Adani Group, TotalEnergies came out with a detailed statement saying its investments in Adani’s entities were undertaken in full compliance with applicable – namely Indian – laws, and with TotalEnergies’ own internal governance processes.
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The France energy major further said that the due diligence, which was carried out to TotalEnergies’ satisfaction, was consistent with best practices, and all relevant material in the public domain was reviewed, including the detailed disclosures to regulators required under applicable laws. “TotalEnergies welcomes the announcement by Adani to mandate one of the “big four” accounting firms to carry out a general audit,” the statement said.
The Hindenburg report, published on January 24, has accused the Adani Group of stock manipulation and fraud by using a wave of shell firms. The charges rocked the group as its stocks plunged nearly 60 per cent, triggering panic among investors about the functioning of the company and the auditors.
Adani Group enlisted Ahmedabad-based Shah Dhandharia & Co to audit its 2021-2022 accounts, according to its annual report. Hindenburg in its report raised serious questions about Dhandharia saying it hardly seemed capable of complex audit work.
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“The audit partners at Shah Dhandharia who respectively signed off on Adani Enterprises and Adani Total Gas’ annual audits were as young as 24 and 23 years old when they began approving the audits. 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,” the report said.
In its statement, TotalEnergies said its exposure resulting from these stakes is limited, as it represents 2.4 per cent ($3.1 billion on December 31, 2022) of the company’s capital employed and only $180 million of net operating income in 2022. “These investments being accounted for under the equity method, TotalEnergies has not performed any re-evaluation in its accounts of its stakes in the listed entities ATGL (Adani Total Gas Ltd) and AGEL (Adani Green Energy) in relation to the increase in their stock values,” it said.
