They Said That? 12/16/15

Abengoa is a Spanish firm in the renewable energy business that slurped up numerous subsidies, including $230 million from the US government, before it filed in November for preliminary protection from creditors. Absent a last minute lifeline, if will file for bankruptcy, the largest ever in Spain. Now check out the following:

Only weeks before the company hit the wall, Standard & Poor’s upgraded its long-term rating on the company, saying it expected it to “execute various actions to reduce debt over 2015.”

So once again a ratings agency didn’t know what was going on. How about the auditors?

And the company’s auditor, Deloitte, didn’t express any alarm about Abengoa’s financial situation until November 13, just two weeks before the company announced that it was seeking preliminary protection from creditors.

How about Pepe Baltá? Who? Pepe Baltá, a 17-year-old secondary school student in Barcelona who examined Abengoa as his economics project last year.

Baltá noticed serious flaws in the company’s accounting. “If it does not act soon, there is a strong risk Abengoa will go into bankruptcy,” he wrote in his 18-page paper, titled “Analytical Report on Abengoa, 2012 and 2013.”

“I have some accounting knowledge,” Baltá, now 18, told the Spanish daily El Mundo, “and Abengoa’s accounts did not seem to add up. There was a lot of debt and few active assets compared to fixed ones. The big surprise was that negative profits were being converted into positives. I didn’t understand how they could do that.”

All excerpts from:

Evidently the good folks at S&P and Deloitee did understand how negative profits could be converted into positives. They must have been graduates from Spain’s equivalent of the Ivy League.

2 responses to “They Said That? 12/16/15

  1. The kid had a “clear” perspective – unclouded by his own agenda!


  2. Pingback: Clouding the perspective with Agenda!  | lisaandrews1968

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