Spanish energy giant Abengoa’s collapse predicted by 17-year-old

solar array wikimediaAs 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.

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    Amber

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    The people that should have known probably were just to busy shorting the stock.

    Good for the kid and I bet he didn’t charge out at $400.00 per hour .
    What’s weird is none of the pension funds were intelligent enough to figure it out ?

    I wonder what the BBC pension fund had bet on this one ?

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