The Hindenburg Research Report Is A Warning Bell And An Eye-Opener For The Truth Behind Many Of Indian Family-Owned Corporates; Adani Group Is Just The First!
Revealing details of a two-year investigation on India's latest proxies of national development, the Adani Group has much that it would want to conceal from the citizens of this country, but for how long? Its recent backdoor acquisition of NDTV may just be from the point of view of controlling the media narrative about the company. Journalists, analysts, media and many a whistleblowers are under immense pressure to change and hide the truth from the public at large.
The Hindenburg Research Report on Adani Group has opened a can of worms, but why do this investigation’s results not come as a surprise?
It’s almost as if we knew but chose to be blind, as it happens in regards to all that are influential, powerful and wealthy in this country!
So, this 2-year Investigation has thrown up some rather stiff details; the findings are thorough and deep. The most essential in any investigation are evidence, facts and data to back the allegations, and the Hindenburg Research Report has done and given us just that.
It has dared to touch one of India’s most recent but rather powerful individuals – Gautam Adani, heading INR 17.8 trillion (U.S $218 billion) Indian conglomerate Adani Group, which has in recent times been continuously hogging the headlines.
The Adani Group, which primarily had its eyes on the infrastructure projects in the country, handles many of the ports (from where large hauls of drugs and other banned narcotics have been seized); it went on to make a back door acquisition of media company (NDTV, wants to control the media narrative?) and is now diversifying into digital and other vital segments, looking for fresh money making opportunities.
Also, remember that the group is set to launch its FPO, which may happen anytime soon.
So now, diving into the gory details of the fraud, manipulation, bogus valuations and simply – a black-dyed white horse – making a run for the winning post, let us get into some of the rather dirty going on’s of this company and its leader as per the details given by this report.
A Tale Of Deceit: Top To Bottom
We will list the modus operandi and then get into the most critical aspect that concerns investors directly.
What are The allegations?
- Outright stock manipulation (where and what is SEBI doing?)
- Accounting fraud schemes over decades (haven’t come to light as yet?)
- Bloated valuations of all its companies (we have spoken about this in my other article)
- Substantial Debt (Is the FPO to cover that and to put the risk on to unsuspecting investors?)
- Under investigation for four major government frauds – money laundering, theft of taxpayer funds and corruption, totalling an estimated U.S. $17 billion.
- A family business and a conglomerate where 8 of 22 key leaders are Adani family members, an equation that gives control of the group’s financials and critical decisions in the hands of a few (thus, family and its interests come first, who gives a damn about the country’s welfare?)
- Adani family members allegedly collaborated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation(Ports) in an apparent effort to create fake or illegitimate turnover and to siphon money from the listed companies (we mentioned about yet another hospitality startup and its owner of doing the same).
- The entire family unit – Rajesh Adani (Gautam Adani’s younger brother), Samir Vora (brother-in-law), and Vinod Adani (elder brother) are and have been involved in a string of illegal activities involving offshore shell entities, forgery and tax fraud, diamond trading scam, managing a network of offshore entities used to facilitate fraud. (phew, these are our country’s and working its top and most crucial infrastructure group for you!)
- The Vinod-Adani shells seem to serve several functions, including (1) stock parking/stock manipulation, (2) and laundering money through Adani’s private companies onto the listed companies’ balance sheets in order to maintain the appearance of financial health and solvency. (FPO again)
Why A Big Red Flag For All Investors?
From Accounting irregularities, sketchy dealing, and bogus independent auditor to annual audits being done by freshers as young as 23-24 years.
- Publicly listed companies in India are subject to rules that require all promoter holdings (known as insider holdings in the U.S.) to be disclosed. Regulations also require that listed companies have at least 25% of the float held by non-promoters to eliminate manipulation and insider trading. Four of Adani’s listed companies are on the brink of the delisting threshold due to high promoter ownership.
- The research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest “public” (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI’s rules enforced. (Why this partiality by SEBI, and what are the Modi government’s interests in this?)
- A former trader for Elara, an offshore fund with almost $3 billion in concentrated holdings of Adani shares, including a fund that is ~99% concentrated in shares of Adani, told us that it is evident that Adani controls the shares. He explained that the funds are intentionally structured to conceal their ultimate beneficial ownership.
- Leaked emails show that the CEO of Elara worked on deals with Dharmesh Doshi, a fugitive accountant who worked closely on stock manipulation deals with Ketan Parekh, an infamous Indian market manipulator. The emails indicate that the CEO of Elara worked with Doshi on stock deals after he evaded arrest and was widely known as a fugitive.
There is a lot more to this report, but herein we have just presented the outline of what Adani Group and its leadership are all about.
Why Are Key Institutions (SEBI) And The Present Government Keeping Quiet?
The people behind this research opine that the Adani Group has been able to operate an extensive, flagrant fraud in broad daylight largely because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal.
Hostility, Murders, Gag Orders: Democracy Where?
Lately, the environment in the country has become increasingly hostile. We are living in a democracy, but in all truth, these democratic rights that we all deserve and written as part of our constitution have been kidnapped by few.
Even a tiny criticism of India’s elite business people and politicians has increasingly resulted in journalists being imprisoned or outright murdered.
What’s more, stock market analysts have been arrested for writing negatively about specific companies.
An example of the same is the Bollywood boycott which the people of this country, in the majority, wanted to put in effect; for multiple reasons – drugs, child trafficking, sexual exploitation etc., and what happened?
The government jumped right in and directed the state governments to provide protection and asked the people to cooperate… Ha!
Amidst this climate of stifled expression, it is not surprising that a corporate fraud has largely gone unreported and even if the insiders all know (politicians, media, stock brokers etc.), who will bell the cat?
Conclusion: It has taken ‘outside the boundary’ whistleblowers to show us the accurate picture of this corporate giant that is getting bigger and bigger with each acquisition, each project bagged, each stock market rise, and with every instance of money exchanged in new and old hands.
Even if the government and Sebi are aware of the ills committed by the company’s top management, why is it allowing this company to capture and run significant projects and sensitive sectors such as ports?
At the end of the day, the question is not who will bell the cat; instead, we are the cats, and the bell is hanging around our necks; it’s time to wake up!