BlackRock blocks bookkeeping votes at India’s SpiceJet

American investment leviathan BlackRock and other SpiceJet (SG, Delhi Int’l) investors have expressed alarm over corporate governance practices and “substantial accounting irregularities” at the budget carrier, the Indian financial daily Mint reported.

BlackRock voted against the reappointment of an audit committee member, Shiwani Singh – the wife of SpiceJet chairman and managing director Ajay Singh – when the airline sought shareholder approval on December 30 for her reelection as director. A second resolution requested the adoption of the latest financial statements for the year to March 2021.

“Vote against audit committee member (Shiwani Singh) because of substantial accounting irregularities for which we believe the audit committee bears some responsibility,” BlackRock summarised as it voted against, documents seen by Mint showed. The New York-based multinational also voted against the resolution to adopt the financial statements “because of serious qualifications by auditors.”

Just over half of the institutional shareholders reportedly voted against Singh’s reappointment, and just under half voted against accepting the financial statements. However, both resolutions were ultimately approved, as Ajay Singh and his family own 59.46% of the company and retail shareholders hold a further third.

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

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

Walker Chandiok and Co, the carrier’s statutory auditor for the 2021 accounts, acknowledged compensation of INR5.6 billion rupees (USD74.5 million) from Boeing for losses incurred from the grounding of the B737 MAX as other income, before the funds had been received, according to Mint.

Approached for comment, a SpiceJet spokesperson told ch-aviation: “This voting pertains to an annual general meeting held on 30 December 2021. The reasons for the ‘against’ voting cast by said foreign portfolio investors are best known to them as they have never sought any clarification from the company on the financial statements for FY 2020-21 or on the appointment of the director. In fact, these investors did not even attend the annual general meeting wherein the company responded to various queries from investors.

“Nevertheless, there is only one qualification which has been mentioned by the auditors and this is on account of a difference in the opinion between the views of the management and the auditors regarding the manner and timing in which compensation from the manufacturer of the grounded 737 MAX aircraft is to be accounted. These are not financial irregularities and this has been disclosed by the company in all transparency with full disclosures at all relevant times. In fact, the view of the management on the said qualification was disclosed and filed with the BSE [formerly Bombay Stock Exchange] on June 30, 2021.”