What Is The Hindenburg Report That Knocked Adani From Third To Eighth Richest Billionaire?

#Adaniscam trended on Twitter on January 29 after the Hindenburg’s report on January 24 titled ‘Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History’, following a two-year investigation, raised concerns about the Adani group’s “substantial debt”. With the hashtag trending on twitter, the Adani group’s stocks spiralled, knocking Adani from third to the seventh and then eighth in the richest billionaire’s list.

Adani Group Looting The Nation Claims Hindenburg Report

On Monday, the Hindenburg Research refuted the Adani Group's 413-page-long response to the report. The firm’s response to the report says, "fraud cannot be obfuscated by nationalism". It also adds the Adani group has ‘predictably’ denied the claims by Hindenburg adding, “We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”

The Adani group in the round of ripostes had called the report is “A malicious combination of selective misinformation and stale baseless and discredited allegations”. The Adani group is now considering taking legal action against Hindenburg research. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg”, Adani group’s legal head said in a statement. Moreover, the group likened the damning allegations made by Hindenburg research to a “Calculated attack” on India, its institutions and growth story, saying the allegations are “nothing but a lie”.

The Hindenburg Research

The report containing details of Adani family controlled offshore shell entities in tax havens, from the Caribbean, Mauritius and United Arab Emirates has caused the group substantial loss since its release. It claims these were used to facilitate corruption money laundering and taxpayer theft while siphoning money from the group’s listed companies.

Activist short seller Hindenburg Research, the firm which caught global attention with take-downs of electric-vehicle makers Nikola and Lordstown Motors, alleged in a report on Wednesday that its two-year investigation found the Adani Group "engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades". The report claimed its “2-year investigation” presented “evidence that the INR 17.8 trillion (U.S. $218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”, also additionally showing evidence of various irregularities in Adani’s finances, from inflated stock valuations to sky-high debt. It said the conglomerate was being run unprofessionally like “a family business”, with Adani family members “controlling the group’s finances and key decisions”.

The report by the tiny New York firm that specialises in short selling and generating public reports via its website that allege corporate fraud, has led to Adani group losing more than USD 50 billion in market value in just two trading sessions and Adani himself losing in excess of USD 20 billion, or about one-fifth of his total fortune.

Adani Group Refutes Report Claims

The Group said that at various points in the report , it was clear that Hindenburg research didn’t have a good understanding of the Indian legal system , the accounting practices and how fund - raising processes work in Indian capital market . In response US based short seller Hindenburg also added’ “We also believe India’s future is being held back By the Adani group, Which has draped itself in the Indian flag while systematically looting the nation. Earlier, the Hindenburg had said that it would “welcome” a legal suit if Adani wanted to file in the USA.

Amid, this crisis, A major concern arises regarding the exposure of LIC and SBI in Adani group’s stock, to which the SBI chairman Dinesh Kumar Khara said , “There is nothing alarming about our Adani exposure and we don’t have any concerns as of now.” He said that Adani group hadn’t raised any funding from SBI in the recent past and that the bank would take a “prudent call” on any funding request from them in the near future. India’s market regulator SEBI Has also increased scrutiny of deals by the Adani group over the past year and will study the report to add to its own ongoing preliminary investigation into the group’s foreign portfolio investors, according to two sources aware of the matter. On the other hand, In an interview to PTI, Jugshinder Singh, Adani Enterprises CFO, said the group will release a comprehensive response to the Hindenburg report, "providing documentary evidence" to "clearly outline that there was no research done and that there wasn't any investigating reporting. Only pure baseless misrepresentation of factual situations, if not lies." The selloff in Adani stocks is being looked into by market regulator Sebi and stock exchanges.