India’s Gautam Adani accused of pulling ‘largest con in corporate history’

Asia’s richest man Gautam Adani has seen his web price drop by almost $11 billion after a US funding agency accused him of “brazen stock manipulation and accounting fraud”.

Adani, 60, is the world’s third-richest individual, with an estimated fortune of round $120 billion and pursuits starting from Australian coal mines to India’s busiest ports.

But the magnate misplaced billions after allegations by short-selling agency Hindenburg Research that precipitated shares in its firms to plunge as buyers rushed to promote shares in his group of firms.

Hindenburg Research printed a report “Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History” on Tuesday alleging that Adani Group “has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”.

The agency stated it had taken a brief place in Adani Group firms after a two-year investigation based mostly on interviews with former executives, web site visits in a number of nations and doc opinions.

Its report claims that Adani’s elder brother Vinod “manages a vast labyrinth of offshore shell entities” in tax havens together with Mauritius, Cyprus and several other Caribbean islands.

Hindenburg stated it had recognized quite a few cases of undisclosed related-party transactions and earnings manipulation “to maintain the appearance of financial health and solvency” of listed Adani firms.

The allegations come forward of an bold $2.5 billion follow-on public provide — India’s biggest-ever — resulting from open for bids on Friday and aimed toward bolstering the business empire’s steadiness sheet.

“The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations,” Adani Group chief monetary officer Jugeshinder Singh stated in a press release.

Singh added that the report had been intentionally timed to undermine the conglomerate’s status “with the principal objective of damaging the upcoming follow-on public offering”.

‘Afraid to talk out’

Adani Group is India’s second-largest conglomerate, with the mixed market capitalisation of its seven listed firms exceeding $218 billion.

Shares in Adani business models have soared as much as 2,000 p.c prior to now three years, including greater than $100 billion to its founder’s web price and vaulting him up the ranks of the world’s richest folks.

Critics of the billionaire attribute his meteoric rise to an in depth affiliation with Hindu nationalist Prime Minister Narendra Modi and assist for his insurance policies.

Hindenburg’s report stated there had been a sample of “government leniency towards the group” stretching again a long time.

“We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal,” the report stated.

Report lists 88 questions for Adani Group

Adani made an enormous fortune mining coal as vitality hungry India grew swiftly after its financial system was liberalised within the Nineties. 

Hindenburg’s report stated key listed Adani firms had “substantial debt” which has put your entire group on a “precarious financial footing” and asserted that shares in seven Adani listed firms have an 85 p.c draw back on a elementary foundation resulting from what it known as “sky-high valuations”.

Shares in Adani Transmission fell 9 p.c, Adani Ports And Special Economic Zone slipped 6.3 p.c and Adani Enterprises ended down 1.5 p.c. Collectively, the seven listed group firms misplaced $10.73 billion in market capitalisation.

Hindenburg Research stated its report adopted a two-year investigation. It alleged the Adani Group had engaged in inventory value manipulation and accounting fraud, amongst different abuses. 

Hindenburg’s report stated 5 of seven key listed Adani firms have reported present ratios — a measure of liquid property minus near-term liabilities — under 1. 

This, the short-seller stated, urged “a heightened short-term liquidity risk”.

Adani Group’s complete gross debt within the monetary yr ended March 31, 2022, rose 40 p.c to 2.2 trillion rupees.

Hindenburg stated its report listed 88 questions it invited the corporate to reply.

Hindenburg is well-known for short-selling. That includes borrowing a inventory one expects to lose worth and promoting it at its present market value with the plan to purchase the identical variety of shares again later at a cheaper price.

Source: TRTWorld and businesses