Adani saga: Grant Thornton, audit firm that overvalued Kingfisher Airlines, now hired by Adani

For industry watchers, the Adani saga only seems to be getting interesting and is rather far from being over anytime soon. Within a day of the Adani Group reported to have engaged Grant Thornton, the American consulting, audit and advisory services firm questions and news reports about its past integrity and ethics have surfaced.  

This is the second hiring by Adani after New York-based law firm Watchwell was roped in to counter Hindenburg Research in court. 

Unfortunately, for the Adani Group, its latest association with Grant Thornton has been reported in the media as being done with a firm that has ‘a history of faulty audits.’ Grant Thornton was penalised over $1.5 million by the British government last year for an inadequate audit of Sports Direct. It was reprimanded for concealing the fact that founder Mike Ashley's brother ran a delivery company for Sports Direct.

In a previous incident, Grant Thornton was fined over $2.8 million for failing to notice critical issues during its audit of Patisserie Valerie, which later went bankrupt. It was determined that Grant Thornton should have questioned the data provided by the company's management but did not. Therefore, the preeminent accounting company has refused to investigate accusations made by struggling businesses in recent years. 

In India, Grant Thornton was recently involved in the sale of Jet Airways as resolutionary advisor appointed by the SBI-led lenders. While the airline actually tries to get off the ground by wriggling its way out of a court-monitored process, former employees have issued legal notices to Ashish Chhawchharia, the erstwhile Resolution Professional for Jet Airways and Partner, Grant Thornton Bharat LLP. The notice issued on February 14 is for non-compliance of the National Company Law Appellate Tribunal (NCLAT) orders.   

But more interestingly, Grant Thornton has been reported by the media to have come under scrutiny of the Central Bureau of Investigation (CBI). In July 2018, the CBI looked into the Rs 4,100 crore valuation used by the now-defunct Kingfisher Airlines. Lenders determined the company held by financial fugitive Vijay Mallya was only worth Rs 160 crore after conducting their own calculations. As a result, Grant Thornton came under scrutiny for allegedly overvaluing the airline.

The auditing firm has been around for nearly a century, giving it a wealth of experience to draw from. Alexander Grant, a fellow accountant, established the seventh-largest accounting network in the world. Grant started his own auditing firm in 1924 at the age of 26, after working for Ernst & Ernst (later Ernst & Young). Alex. Grant & Co. has merged with companies in Australia, the United Kingdom, and Canada over the years.  

It became part of the Grant Thornton International network in 1980 when it joined forces with Thornton Baker, also based in the United Kingdom, and forty-nine other firms from across the world. The company employs 60,000 employees in 150 different countries and has helped with technical aspects of India's Clean Ganga initiative. Together, they advise the NITI Aayog on how to better allocate public funds and improve the effectiveness of government spending.