Déjà vu moment for Adani Group after Hindenburg allegations
CHENNAI: The indictment by the Securities Exchange Commission and the group’s loss in market capitalisation is a moment of déjà vu for Adani Group after the Hindenburg reports of 2023. However, this time it is different as the group is facing charges of violating US laws by a regulator and not allegations by a short-seller.
In its January 2023 report, Hindenburg Research accused the Adani Group of engaging in extensive accounting fraud, stock price manipulation, and exploiting tax havens.
The report alleged that the members of the Adani family controlled numerous offshore entities in tax havens such as Mauritius and the Caribbean. Hindenburg also pointed out that the Adani Group had accumulated significant debt, which raised questions about its ability to meet financial obligations.
The allegations saw a bloodbath of Adani stocks in the market and it took almost a year for the group to recoup.
Findings of the Securities and Exchange Board’s investigations into the group’s transactions have not come out yet. Meanwhile, SEBI sent a notice to Hindenburg accusing it of using non-public information to build short positions against the Adani group. Hindenburg in August this year further alleged that SEBI Chairperson Madhabi Puri Buch and her husband had stakes in offshore entities linked to the Adani Group.
However, this time around Adani Group has more reasons to worry as it is not a set of allegations from a private short-seller, but charges of violations of US laws by the market regulator.
SEC has indicted Adani and his associates for breaching antifraud provisions of federal securities laws, including the Foreign Corrupt Practices Act, by providing false information to US investors regarding their anti-corruption policies.
The charges include promising more than $250 million in bribes to Indian government officials to secure solar energy contracts and conspiracies to commit securities and wire fraud.
A Reuters report said arrest warrants were issued in the United States for Gautam Adani and his nephew Sagar Adani after the indictment and prosecutors plan to hand those warrants to foreign law enforcement.