"Deliberate & Malicious Intent To Tarnish Reputation": Gautam Adani On Hindenburg Report

During a shareholder address, Gautam Adani, the founder and chairman of Adani Group, strongly condemned the Hindenburg report, stating that it was a deliberate and malicious attempt to tarnish the reputation of the Adani Group and profit by manipulating the company's stocks in the short term. Adani expressed confidence in the group's governance and disclosure standards, reiterating his commitment to continually improve them.

Adani acknowledged the support received from stakeholders during the challenging period and emphasized that the Adani Group had raised significant funds from international investors without any international credit agency downgrading their ratings. He pointed out that the majority of the allegations mentioned in the Hindenburg report were related to the period from 2004 to 2015.

Addressing false narratives promoted by parties with vested interests across news and social media platforms, Adani stated that the group took measures to protect investor interests. Despite the full subscription of the Follow-on Public Offering (FPO), they chose to withdraw it and return the money to investors to safeguard their interests, reported NDTV

Gautam Adani also highlighted the findings of a Supreme Court Expert Committee that publicly released its report in May 2023. The committee found no instances of regulatory failure and identified credible charges of targeted destabilization of the Indian markets. Furthermore, the committee confirmed the quality of disclosures made by the Adani Group.

Gautam Adani strongly defended the Adani Group against the allegations made in the Hindenburg report, emphasizing their commitment to governance and disclosure standards, as well as their efforts to protect investor interests. He cited the findings of the Supreme Court Expert Committee as evidence supporting the group's credibility and the targeted nature of the alleged destabilization.

What Is Hindenburg Research?

On January 24, Hindenburg Research, a US-based investment research firm, published a report titled 'Adani Group: How The World's 3rd Richest Man Is Pulling The Largest Con In Corporate History,' which alleged that the Adani Group has been involved in stock manipulation and accounting fraud over several decades. The report came just two days before Adani Enterprises issued a $2.5 billion follow-up public offering.

Hindenburg Research specializes in forensic financial research and has extensive experience in the investment management industry. The firm focuses on equity, credit, and derivatives analysis. It should be noted that Hindenburg Research holds short positions in Adani Group's firms through US-traded bonds and non-Indian-traded derivative instruments.

According to the Hindenburg report, the chairman of the Adani Group, Gautam Adani, has seen his wealth grow by over $100 billion in the past three years, primarily due to significant stock price appreciation in the group's seven key listed companies, which have increased by an average of 819% during that period.

The report highlighted that key listed Adani firms have taken on substantial debt, including pledging shares of their inflated stock for loans, leading to a precarious financial situation for the entire group. It claimed that five out of seven key listed Adani companies have reported "current ratios" below 1, indicating near-term liquidity pressure.

The report also mentioned allegations against Rajesh Adani, Gautam Adani's younger brother, regarding a diamond trading scheme involving offshore shell firms to generate artificial turnover in 2004-2005. The Hindenburg report added that Rajesh Adani had been arrested at least twice on separate allegations of forgery and tax fraud before being promoted to serve as Managing Director of the Adani Group.

The research firm further alleged that Vinod Adani, Gautam Adani's elder brother, has been linked to government investigations for his alleged involvement in managing a network of offshore entities used for fraud. The report claimed that Vinod Adani manages numerous offshore shell entities, including 38 Mauritius-based shell entities controlled by him or close associates. These shell firms are said to serve various functions, including stock manipulation and money laundering.

According to Hindenburg's RTI (Right to Information) filing with the Securities and Exchange Board of India (Sebi), offshore funds related to the Adani Group are under investigation, more than a year and a half after concerns were initially raised by media and parliament members.

Hindenburg Research expressed its belief that the Adani Group has been able to operate a large-scale fraud due to a reluctance from investors, journalists, citizens, and politicians to speak out, fearing reprisal. The report concluded with 88 questions and suggested that if Gautam Adani genuinely embraces transparency, he should be able to easily answer them.

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