Adani Group appoints new auditor for UK subsidiaries amidst controversy

The Adani Group, one of India's largest conglomerates, has significantly changed its auditor line-up for its primary UK subsidiaries.

This move comes amidst controversy surrounding the conglomerate's financial practices and allegations of accounting fraud.

The Financial Times reported that London-based firm Ferguson Maidment & Co has assumed the auditor role for Adani's UK subsidiaries after the previous auditor, Crowe UK, resigned in March.

The decision to switch auditors follows a tumultuous period for the Adani Group, triggered by allegations of accounting irregularities and fraud by US short-seller Hindenburg Research in January. These accusations led to a stock market sell-off, resulting in substantial losses for the conglomerate.

Hindenburg Research had raised concerns about Adani's use of a relatively small Indian firm, Shah Dhandaria & Co, as one of its primary auditors. In response, the Adani Group defended its audit practices, stating that it followed a policy of engaging with globally recognised auditors.

Adani Energy Holdings Limited and its subsidiary companies recently filed annual accounts with Companies House in the United Kingdom. Ferguson Maidment & Co, a London-based firm with four partners, audited these accounts. Previously, Crowe UK, the 12th largest accountancy firm in the UK according to Accountancy Age rankings, had been the auditor for Adani's UK subsidiaries but resigned two months after Hindenburg Research's report was published.

Crowe UK apparently indicated no specific reasons or matters connected to its resignation that warranted the attention of the companies' stakeholders.

It's noteworthy that Adani had already shifted the audit of its UK entities, primarily holding renewable energy projects in India, away from a Big Four auditor. Adani acquired these companies in 2021 from SoftBank, which previously used Deloitte as their auditor.

Vivek Kapoor, a partner at Ferguson Maidment & Co who signed off on Adani Energy Holdings' financial statements for the year that ended 31 March 2023, declined to comment on the audit, citing client confidentiality. However, he emphasised the firm's long history and track record of serving high-profile clients.

Adani Energy Holdings Ltd is a subsidiary of Adani Green Energy Ltd, one of the 10 listed companies controlled by the Adani Group in India, with interests spanning power, energy, ports and airports. TotalEnergies holds a 20 percent equity stake in Adani Green Energy.

Adani and TotalEnergies have joined forces in a strategic partnership, with a focus on retailing compressed natural gas (CNG) for vehicles and supplying piped gas to households and industries. Operating under the banner of Adani Total Gas, a publicly listed entity, this collaboration spans an impressive 52 licenses, covering 124 districts throughout India.

Their expansive network boasts 460 CNG stations and serves approximately 700,000 consumers with piped cooking gas. In the realm of investments, 2022 saw TotalEnergies' commitment to acquire a substantial 25 percent stake in Adani New Industries Ltd (ANIL), a key player in the burgeoning green hydrogen sector.

However, this ambitious investment briefly hit pause in February, as it became subject to investigation following allegations of accounting irregularities and stock manipulation raised by US short seller Hindenberg—a claim firmly denied by Adani. More recently, TotalEnergies has made a noteworthy move by injecting $300 million into a collaborative venture with Adani Green Energy, signaling their shared commitment to bolstering India's renewable energy capacity.

This partnership not only signifies a significant financial commitment but also grants TotalEnergies direct ownership of assets contributed by Adani, solidifying their position in India's rapidly evolving energy landscape.

This latest change in auditor is just one of several recent shake-ups in the Adani Group's audit landscape. Deloitte also resigned as the auditor of Adani Ports and Special Economic Zone in August, citing Adani's reluctance to allow an independent party to assess Hindenburg's claims as one of the reasons for its departure.

Shah Dhandaria, the small Indian firm mentioned in the controversy, resigned from auditing Adani Total Gas but continued to serve as the auditor of Adani Enterprises, the group's flagship company.

This series of auditor changes and allegations has not gone unnoticed, as it does of course raise questions about the conglomerate's transparency and governance practices.

Adani Group has consistently denied Hindenburg's allegations. However, given an apparently close and positive relationship between the Adani family and the Narendra Modi government, the Opposition ranks have yet to stop insisting on an independent probe into the allegations, preferably under the aegis of a joint parliamentary committee.