The Adani Group’s activities have once again come under scrutiny in an article published by the Financial Times. The article reported that the findings were shared by the OCCRP (Organized Crime and Corruption Reporting Project), which also shared them with The Guardian. It mentioned that associates of Vinod Adani, the brother of Gautam Adani, controlled 13% of the offshore funds. Additionally, the article pointed out that Chang Chung-Ling and Nasser Ali Shabar Ahli were among these associates. In a 2007 case filed by the Directorate of Revenue Intelligence (DRI), Chang was named as the director of three Adani companies, and Ahli was also implicated in the same case. Taking all of this into account, it appears that the promoters’ shareholding far exceeds the SEBI-mandated 75%.
On January 24, 2023, a US-based short-selling company (Hindenburg) published a report alleging that a significant fraud was being orchestrated by the Adani group. The report highlights the following accusations:
1. Stock Manipulation– The research firm revealed that share prices were artificially inflated by generating bogus demands through investment firms operating through back channels, primarily based in Mauritius and other tax havens.
2. Accounting Fraud– The Adani group inflated the value of its assets while downplaying its liabilities, resulting in accounting fraud.
3. Excessive Debt- The company has accumulated a substantial amount of debt, rendering it financially unsustainable. Banks are reportedly overlooking this aspect when approving loans for the group.
4. Lack of Transparency– The short seller alleged that the Adani group lacks transparency, making it challenging for investors to assess the company’s financial stability.
After this, Adani’s stock plummeted by 20%, while the Sensex dropped by 3% in the following days. The total loss to the firm exceeded 110 billion dollars. Public banks were hit hardest, losing several billion rupees in this turmoil.
Later, the opposition demanded a Joint Parliamentary Committee (JPC) investigation, which was initially denied by the government. However, the case was subsequently taken up in the Supreme Court. The top court established a committee that directed SEBI to file a report. SEBI’s report stated that the regulatory body had examined 24 cases mentioned in the Hindenburg papers and had sought assistance from foreign regulators and authorities. The May report also indicated that SEBI had long suspected that the holdings belonged to the Adani family group. The case’s hearing is scheduled for September 9, 2023.
Rahul Gandhi has suggested that the Adani Group may have connections with the Modi government. The Wayanad MP has raised this issue on various platforms, including in Parliament and during the ongoing INDIA alliance in Mumbai.
Such malpractices are eroding trust in the Indian stock market, and SEBI must take steps to restore confidence.