Adani Adani Group-Hindenburg Controversy
Adani Group firms’ stocks lost combined market capitalization of over $100 billion in the past week after US short-seller Hindenburg Research published a report on the group’s activities, where it accused the conglomerate of “stock manipulation and accounting fraud”.
Hindenburg’s scorching allegations have caused the fortune of Adani Group’s founder, Gautam Adani, to slide by more than $34 billion in just a week, according to the Bloomberg Billionaires index.
Gautam Adani has slipped out of the list of the world’s top 10 richest people and could soon be supplanted as Asia’s wealthiest person if shares in his conglomerate continue to slide. He slipped out of the list of the world’s top 10 richest people and could soon be supplanted as Asia’s wealthiest person if shares in his conglomerate continue to slide.
On 24th Jan Hindenburg released a report outlining numerous issues of suspected fraud at the Adani Group.
On behalf of HINDENBURG Report Adani Group released a 413-page response that opened a sensationalistic claim that Hindenburg’s are “Madoffs of Manhattan”.
Adani also claimed we have committed a “flagrant breach of applicable securities and foreign exchange laws.” Despite Adani’s failure to identify any such laws, this is another serious accusation that we categorically deny.
It also predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative, claiming our report amounted to a “calculated attack on India.” In short, the Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself.
Report Alleged That Adani Group Has Engaged in Billions of U.S. Dollars In Suspicious Dealings with Its Chairman’s Brother, Vinod Adani, And His Labyrinth of Offshore Shell Entities.
These Dealings Raised Serious Questions About Stock and Accounting Manipulation
Adani’s Defense: Vinod Adani, Brother to The Chairman, Is Not a Related Party to The Group and There Are No Disclosable Conflicts Relating to This Web of Opaque Transactions.
In its response, Adani did not seem to dispute the existence of these transactions and made no effort to explain their obvious irregularities.
Instead, Adani bizarrely argued that Vinod Adani is not a related party to the Adani Group, and that there are no disclosable conflicts relating to the transactions that have collectively moved billions of U.S. dollars through Adani Group entities, largely through offshore shell entities.
Hindenburg report Asked About the Source of The Billions of U.S. Dollars That Have Flowed from Vinod Adani-Associated Offshore Shell Entities Through the Adani Group
Adani’s Defense: “We Are Neither Aware nor Required to Be Aware of Their ‘Source of Funds”.
Here we list several examples of responses that simply failed to address the questions that Hindenburg’s report asked:
- Our report included documentation from a 2007 SEBI ruling declaring that Adani promoters had aided and abetted infamous market manipulator Ketan Parekh in his manipulation of shares of AEL, the predecessor entity to Adani Enterprises. Per the SEBI ruling:
“The charges levelled against promoters of Adani that they aided and abetted Ketan Parekh entities in manipulating the scrip of Adani stand proved”. - Hindenburg’s report included evidence showing that SEBI investigated and prosecuted more than 70 entities and individuals, including Adani promoters, for manipulating Adani stock between 1999 to 2005. We asked for an explanation as to why Adani’s listed companies so regularly seem to be the subject of market manipulation investigations and prosecutions.
Adani’s response once again claimed it was not “aware of, nor are we required to be, aware of any proceedings against these other ‘entities and individuals’”.
We find it hard to fathom that Adani is completely unaware of the repeated allegations and prosecutions associated with the manipulation of its stock. This is especially the case considering the irregular and outsized performance of its listed companies relative to benchmarks and peers. - Hindenburg’s report included a question relating to Adani’s statement to regulators, claiming that Vinod Adani was (emphasis added) “not at all having any involvement in any Adani Group of companies”.
The question, which parallels issues that continue to this day, centered around whether the Adani Group had been forthright to the government about its dealings with Vinod Adani.
Adani’s response seemed to indirectly confirm that its statements to regulators were in fact false, adding qualifying language claiming that Vinod was not involved in “relevant” entities associated with the investigation, as opposed to the “any” it had claimed when asked by regulators. - Hindenburg’s report showed that Mauritius shareholders had effectively bailed out Adani Green Energy and helped it avoid delisting by participating in 2 offers for sale (OFS) deals. We had asked Adani Group to detail the entities involved in these transactions by providing data from its weekly shareholding patterns. These patterns are available (although not publicly disclosed) for many corporates in India.
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