BlackRock blocks accounting votes at SpiceJet in India

US investment giant BlackRock and other investors in SpiceJet (SG, Delhi Int’l) have expressed concern over the airline’s corporate governance practices and “substantial accounting irregularities”, the financial daily reported. Indian Mint.

BlackRock voted against reappointing audit committee member Shiwani Singh – the wife of SpiceJet chairman and chief executive Ajay Singh – when the airline sought shareholder approval on December 30 for re-election as director. A second resolution requested the adoption of the last accounts for the financial year ending in March 2021.

“Vote against the member of the audit committee (Shiwani Singh) due to material accounting irregularities for which we believe the audit committee bears some responsibility,” BlackRock summed up voting against, according to documents seen by Mint. The New York-based multinational also voted against the resolution to adopt the financial statements “due to serious reservations from the auditors”.

Just over half of institutional shareholders reportedly voted against renewing Singh’s term and just under half voted against accepting the financials. However, both resolutions were eventually approved as Ajay Singh and his family own 59.46% of the company and retail shareholders own another third.

Three other non-Indian investors, Legal & General Investment Management of the UK, American Century Investments of Kansas City and State Street Global Advisors of Boston, also voted against both resolutions, according to documents disclosed by Mint. Legal & General noted that it downvoted because auditors had “expressed concerns” about SpiceJet’s accounts.

In mid-2020, auditor SR Batliboi & Associates LLP questioned SpiceJet’s status as a going concern given the steady erosion of the airline’s net worth in previous years.

Walker Chandiok and Co, the carrier’s auditor for the 2021 accounts, has acknowledged compensation of INR 5.6 billion rupees (USD 74.5 million) from Boeing for losses suffered as a result of the grounding of the B737 MAX in as other income, before the funds have been received, according to Mint.

Spicejet did not immediately respond to ch-aviation’s request for comment.

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