Investing.com -- Independent forensic audit results posted by Eurofins Scientific (EPA:EUFI) directly refute allegations made by short-selling firm Muddy Waters (NYSE:WAT), the company says.
The forensic audit, conducted by Ernst & Young Paris, examined Eurofins' cash pooling arrangements and the consolidated financial statements as of December 31, 2023.
Eurofins in a statement said the audit found no evidence of material misstatements or irregularities in its cash statements, management practices, or documentation, countering MW's accusations of financial misconduct.
“These results speak for themselves, refute the slanderous allegations by Muddy Waters, and reaffirm our dedication to transparency and the reliability of information published by Eurofins,” said Eurofins’ chief executive, Gilles Martin.
The short seller, Muddy Waters, had published reports in June and July 2024 alleging irregularities in Eurofins' financials, specifically pointing to issues in cash reporting and related-party transactions involving real estate.
However, the forensic audit revealed that all the bank statements, bank confirmations, and audit reports used in the examination were authentic, with no signs of tampering.
The audit identified only two minor exceptions, which led to a €1.2 million overstatement—considered immaterial at 0.1% of the total cash balance reported at year-end 2023.
In a broader rebuttal to the claims, Eurofins mentioned its long history of transparency regarding related-party transactions. One of MW’s main accusations was that Eurofins had overpaid for operating businesses in order to subsidize real estate transactions benefiting its main shareholder, Dr. Gilles Martin.
Eurofins refuted this claim, stating that it thoroughly reviewed all past transactions over the last 25 years and found no evidence to support MW's assertions.
As per Eurofins, the acquisition multiples paid for businesses during the relevant period were consistent with industry norms, further invalidating the short seller's claims.