Hit hard by Hindenburg Research's report, the Adani Group has tried everything from dismissal of allegations as malicious to early repayment of loans for addressing concerns about debt. But all of that didn't stopped the conglomerate's market value from crashing by $120 billion in a couple of weeks. After hiring New York-based lawfirm Watchwell to counter Hindenburg in court, Adani has turned to American firm Grant Thornton for an audit.
Auditing books for a century
Almost a century old, the world's seventh largest accounting network has been picked by Adani to establish credibility. After working for Ernst & Ernst, which later became Ernst & Young, accountant Alexander Grant founded his own audit firm at the age of 26 in 1924. Over the years Alexander Grant & Company joined Australian, British and Canadian firms.
Association with Indian government projects
Finally in 1980, it joined UK-based Thornton Baker along with 49 global firm, to form the Grant Thornton International network. With 60,000 people working for it in 150 countries, the firm has also provided technical assistance for India's Clean Ganga mission. They are also strategic advisors for the NITI Aayog, helping it with more efficient public investment.
History of faulty audits
But the major accounting firm challenging the likes of Big Four, has its own history of missing out on details. For instance, last year the British regulator fined Grant Thornton more than $1.5 million, over a faulty audit of Sports Direct. It was pulled up for failing to mention that a delivery firm for Sports Direct was a related party, managed by the founder Mike Ashley's brother.
In another case, it was hit by a penalty of more than $2.8 million for missing red flags in its audit of Patisserie Valerie, which eventually collapsed. Grant Thornton was found guilty of not questioning the information that was provided by the firm's management. Hence, in the recent past, the leading accounting firm has failed to scrutinise claims made by firms facing crisis.
Role in Kingfisher fiasco?
But closer to home, Grant Thornton India had faced scrutiny from the CBI in 2018, for valuing the now grounded Kingfisher Airlines at Rs 4,100 crore. When lenders conducted their own calculations of the firm owned by financial fugitive Vijay Mallya, they found that it was worth only Rs 160 crore. Hence Grant Thornton was under the scanner for inflated valuation of the carrier.
By going for independent audits from this global network of accountants, Adani is hoping to discredit the Hindenburg report.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)