Adani Group reportedly continues to associate with a controversial firm that former auditor Deloitte had flagged as a reason for its resignation.

What Happened: Regulatory filings reveal an ongoing association between the Adani Group and Howe Engineering Projects (India), a contracting firm controlled by a Taiwanese family, Bloomberg reported. The filings show that the connection has changed amid government investigations and auditor scrutiny, shedding light on potential governance challenges.

Howe Engineering encompasses the core operations of PMC Projects, previously under scrutiny in 2014 for allegedly being used by Adani’s empire to channel funds overseas. While these allegations were dismissed in 2017, recent filings suggest Adani’s continued ties with Howe.

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PMC's engineering business was reportedly folded into Howe in 2016, the business publication said, citing court filings. Howe reportedly continues to be an Adani contractor for some of the largest ports and railway lines currently under construction in India

Why It Matters: Despite auditor Deloitte’s reservations about labelling Howe a related party, Howe remains a contractor for Adani and is actively involved in major port and railway projects in India, recent court filings indicate.

Deloitte’s concerns about payments from Adani's ports company to Howe led to the accounting giant’s resignation as the auditor for Adani Ports & Special Economic Zone in August, citing insufficient oversight.

This revelation could raise governance concerns, especially regarding transparency in financial dealings within Adani entities. Adani maintains that Howe and PMC are independent entities, but the nature and extent of their connection remain unclear.

Background: The Adani Group has been under pressure ever since U.S. short-seller Hindenburg Research levelled allegations of financial fraud against the conglomerate. However, the Gautam Adani-led group has seen some relief recently with the Supreme Court finding no fault with a Securities and Exchange Board of India (SEBI) investigation into the firm that found no evidence of such manipulation. Meanwhile, a U.S. agency gave Adani Ports a clean chit, saying the allegations do not apply to the firm.

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