As Spanish engineering and renewable energy giant Abengoa struggles to avoid becoming the country’s biggest bankruptcy, it has emerged that a 17-year-old schoolboy predicted its collapse a year ago, spotting accounting discrepancies apparently overlooked by both Deloitte and Standard & Poor’s.
Pepe Baltá, a secondary school student in Barcelona, chose Abengoa as his economics project and noticed flaws in its accounting. “If it does not act soon, there is a strong risk Abengoa will go into bankruptcy,” Baltá wrote last year in his 18-page paper, titled Analytical report on Abengoa, 2012 and 2013.
Baltá, who is now 18 and studying medicine, said he was “very surprised that what I wrote actually happened. I only have basic secondary school knowledge of economics”.
“I have some accounting knowledge,” he told El Mundo newspaper, “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.”
Only weeks before the solar and wind power company, which employs 27,000 people worldwide, admitted to €9bn (£6.5bn) in debts, the ratings agency Standard & Poor’s upgraded its long-term rating on the company, saying it expected it to “execute various actions to reduce debt over 2015”.
At the time, a company press release described the S&P upgrade as “the validation of Abengoa’s financial plan”. It was not until 13 November that Deloitte, the company’s auditors, expressed any alarm about the company’s financial situation.