Adani: The Largest Corporate Con

In a report published on 25th January by Hindenburg Research, Adani has been accused of “pulling the largest con in corporate history”, by improper use of offshore tax havens, accounting fraud, stock manipulation, and money laundering.

The report noted that the seven key companies that are part of the Adani conglomerate are 85%+ overvalued. Their stock prices have also seen a mysterious spike of 819% over the past three years. Adani himself has a networth of $120 billion. All of this, according to Hindenburg, is a result of brazen stock manipulation and accounting fraud scheme over the course of decades

Eight out of twenty-two key leaders in the Adani group are members of the Adani family. This results in the control of the group’s finances and key decisions in the hands of a select few. These family members have been part of many major scams and have been under government investigations for money laundering, theft of taxpayer funds, and corruption of an estimated $17 billion.

Rajesh Adani, Gautam Adani’s brother, has allegedly forged import/export documentation to generate illegitimate turnover and siphon money. Gautam Adani’s brother-in-law Samir Vora was part of a diamond trading scam and was accused of making false statements to the regulators. Vinod Adani has also been under investigations for his roles in facilitating fraud through offshore entities.

All these investigations were either dropped, or let go by payment of meagre fines. Usually, when an executive is alleged to have participated in financial fraud, and has been at the forefront of these schemes meant to conduct money laundering and stock manipulation, they are terminated. But at the Adani Group, these executives are promoted. Rajesh Adani is the managing director, Samir Vora is the executive director of the Australian division, and Vinod Adani operates a vast empire of shell companies that funnel assets through Adani Group.

The key allegation that Hindenburg’s investigation makes is that while Indian companies are expected to maintain a minimum public shareholding of 25% by SEBI, the Adani group public shares are being manipulated. This is being done by maintaining offshore entities (based in Mauritius) that is buying up a major chunk of these publicly available share. As a result the price of the actually available shares in the market are being artificially inflated, giving the company an impression of an inflated value. Moreover the audits that have been performed of the company have been done by a small firm composed of a relatively inexperienced auditors.

In an official statement, Adani group called this report an “attempt by a foreign entity to mislead the investor community”. Any international whistleblower that uncovers truths about the modi regime and their supporters are discredited by being called foreign entities. The group has not given out any clarifications for the allegations that have been unmasked in the report. The report ends with eighty-eight questions to Adani, and the Adani group has answered none. Instead, they have responded by calling the report “unresearched” and have resorted to threats.

Adani’s growing empire is a reflection of concentration of wealth in the hands of a favoured few, while the rest of us suffer under sky high unemployment and poverty. When Narendra Modi took office, he flew from Gujarat to New Delhi in Adani’s private jet. This public display of friendship symbolised their concurrent rise to power in a new world where the common people are at the mercy of divisive politics and plutocratic policies. Adani now owns airports, coal power production, gas distribution, renewable energy, media, and private ports, all over the country. Being friends with the prime minister has increased his net worth by 230%.

Adani has expressed in interviews that he holds an open mind towards criticism. But the Adani group has constantly filed legal suits against journalists and activists. Paranjoy Guha Thakutra was issued arrest warrant for reporting on allegations against Adani for tax evasion. In 2021, a youtuber who made critical videos of Adani was sent out a court gag order. Adani also had an activist in Australia followed by private investigators. Amidst the research, one of the most fundamental questions that the report asks is that if Adani Group has nothing to hide, why does it feel the need to pursue legal action against even the smallest of its critics?

After the research was published, most media houses reported on it through carefully worded news articles. NDTV, which was acquired by the Adani group did not report on the incident until two days after, to merely talk about the crash in the stocks of Adani group. In the past, NDTV has extensively reported on other Hindenburg Research’s findings about Elon Musk-Twitter, Nikola Corp and Opera. However, this time, it maintained an ominous silence.

After the uncovering of one of the largest corporate scams in the country, the regulatory bodies of the government such as SEBI and RBI are suspiciously quiet. It is not surprising that no investigations are underway. Given the government’s past records with Adani, and other big corporate conglomerates, it appears as though Adani might get away with it once again.

The only reason Adani could operate such a massive scale fraud in broad daylight was because the media and politicians are all at the mercy of the Adani group. Adani is not answerable to anyone, and has made his way in the business world without regard for regulations. The government has also constantly made policies that enabled Adani to accumulate most of the country’s resources in his hands.

It is important to note that it is based on the assumption of the total value of its companies that banks advance loans to the Adani group. These loans often finance the purchase of new entities and public assets that have been sold to Adani. Essentially the Adanis have managed to develop a bubble that may potentially wreck the Indian economy and banks. Even companies like LIC, which have brought Adani shares may find themselves in dire straits if Adani goes under.