bBillionaire Gautam Adani slipped from being the world’s third-richest man to fourth, after an activist investment firm released a report on Tuesday accusing his company, Adani Group, of “brazen” stock manipulation and fraud accounting worth $218 billion, clearing $919 million from it. personal net worth.
Hindenburg Research, which has previously shorted or bet companies such as electric truck maker Nikola Corp and Twitter, said it has short positions in Adani companies through US-traded bonds and non-Indian derivative instruments.
Tuesday’s report sent shares linked to seven of Adani Group’s listed companies tumbling more than 5% on Wednesday, taking a $10.8 billion hit, and forcing the company to issue a strong denial of its content.
Below, what you know about Adani and the corporate corruption allegations.
Who is Gautam Adani?
Gautam Adani is a self-made billionaire, and India’s richest man, with a net worth of approximately $118 billion as of April 2022. Much of this wealth has been accumulated over the past three years through his company Adani Group, as his share prices. climbed major listed companies, pushing the rank of billionaire to the third richest man in the world, behind Elon Musk and Jeff Bezos.
The entrepreneur started as a commodities trader in the 1980s before founding his company Adani Group in 1988, eventually expanding it into a private infrastructure empire that operates ports, airports and coal mines across India and the world. The group also has multiple subsidiaries through its data centers and cable and defense goods manufacturing. It plans to expand further by investing $70 billion in green energy businesses in the coming year.
Read more: India’s richest man is buying a major TV channel. It is a Blow for the Independent Media in the Country.
The company’s success has often been linked to lucrative government concessions, thanks to Adani’s close relationship with India’s ruling Bharatiya Janata Party. In the past, Adani has been a vocal supporter of Prime Minister Narendra Modi’s vision for a “self-reliant India”.
What do the Hindenburg results reveal?
Among other allegations, the report says the Adani Group has been engaged in stock price manipulation and accounting fraud for decades, and found evidence that the group’s main listed companies had fallen in value by 85% despite “skyrocketing valuations”. He added that substantial debts put the group on a “precarious financial footing”.
The report names several family members – such as Gautam Adani’s brothers Rajesh and Vinod Adani, as well as partners of the Adani Group – for their involvement in major cases of bribery and tax evasion. Members of the Adani family have been the subject of past corruption investigations by the Securities and Exchange Board of India (SEBI) and the Directorate of Information Review. The Hindenburg report also claims that Adani family members allegedly collaborated in the creation of offshore shell entities worth $4.5 billion through forged documents, mainly in tax haven jurisdictions such as Mauritius, the UAE, and Caribbean islands. Hindenburg said SEBI was still investigating a case in Mauritius in September 2022, but no action has been taken against the group so far.
Hindenburg said the report’s findings were based on interviews with dozens of people, including former senior executives at Adani Group, thousands of documents, and visits to due diligence sites in nearly half a dozen countries.
How has the Adani Group responded to the allegations?
Adani Group chief financial officer Jugeshinder Singh said in an official statement the company was shocked by the report, calling it a “malicious mix of selective misinformation and old, unfounded and discredited allegations”.
Adani Group did not address specific allegations in its official statement but said it had always complied with the law. The conglomerate also said the timing of the report suggested a malicious intent “to undermine the reputation of the Adani Group with the primary objective of damaging the follow-on Public Offering of Adani Enterprises,” referring to the group’s plans to increase the amount of free trade. shares.
The report was published days before a $2.5 billion stock sale bid for Adani’s secondary shares begins on Friday, which will include anchor investors such as the Abu Dhabi Investment Authority and Morgan Stanley.
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