The Web – From Hiring New York-Based Law Firm Wachtell To Grant Thornton for Audit, What Is Adani’s Gameplan? As His Entire Family Run Conglomerate Gears Up For The Biggest Battle Of 2023!

The Adani- Hindenburg Saga continues, and as days have passed since the release of the research report, the Adani group has taken several critical steps to mitigate its losses on the stock markets, its reputation and to counter the allegations that have opened a pandora’s box for Adani.

But what is the Adani game plan, and how does it plan to take on Hindenburg? Will the Adani group succeed, or will it falter? 

Let us find out – 

First Step: Cyril Shroff Comes To The Rescue! Wachtell To Represent Adani Group

Adani Group has hired New York-based law firm Wachtell, Lipton, Rosen & Katz to counter allegations against it raised by short-seller Hindenburg Research.

According to reports, Watchell will work on the Adani Group‘s “legal, regulatory and public relations” responses toward allegations of fraud raised against it by the Hindenburg. 

But herein is the twist – Wachtell was first approached by Indian law firm Cyril Amarchand Mangaldas which represents the Adani Group and is led by founder Cyril Shroff who is Karan Adani’s (Gautam Adani’s son) father-in-law.

Who Is Cyril Shroff?

Karan Adani’s father-in-law Cyril Shroff is part of the committee on corporate governance in SEBI, The Securities and Exchange Board of India. 

Karan Adani is the son of Adani Group’s chairman Gautman Adani. He is also the CEO of Adani ports and SEZ.

The Web 

The fact that Cyril Shroff is associated with SEBI, and that too at a high level in the corporate governance committee, and the recent directions SEBI gave to look into the allegations of stock manipulation etc., against Adani group, is a highly complex web, a difficult one to understand and to keep track off.

Wachtell Lipton – the most expensive law firm in the US 

Since its inception in 1965, the firm has built a reputation for taking on complex corporate governance cases.

The law firm proclaims to have experience in complex fields of- mergers and acquisitions, strategic investments, takeovers and takeover defence, shareholder activism, corporate and securities law and corporate governance. 

The firm has an excellent track record of innovative solutions and innovations that have dramatically impacted business and law.

Incidentally, the firm was hired by Twitter Inc when it prepared to sue Elon Musk and force him to complete the $44 billion acquisition of the social media company. 

The law firm is also associated with representing Musk and Tesla Inc’s board in a lawsuit brought by Tesla shareholders over the electric vehicle maker’s $2.6 billion acquisition of solar panel maker SolarCity. However, the firm’s lawyers left the litigation in 2019. 

Wachtell was also among the legal advisers on Musk’s plan to take Tesla private in 2018.

Lipton was the architect of the “poison pill”, which is a type of defensive tactic used by a corporation’s board of directors against a hostile takeover. It’s formally referred to as a shareholder rights plan.

Why This Law Firm

The reason Adani group may have hired Wachtell is that it has an impressive track record and has won many accolades representing cases that have ‘significance, merit and value.’

• In March 2021, Wachtell was recognized with the Top Firm award in the Covid-19 Response category.

• Also received an Honorable Mention in the Training & Mentorship category by the Yale Law Women’s Top Firms for Gender Equity & Family Friendliness Report.

• In 2020, the company was recognized among the Top Firms for Inclusion Initiatives. 

• In 2018, in the same report, it received category honours for Leadership & Promotions.

• In 2020, the Diversity & Flexibility Alliance recognized Wachtell as one of 46 firms with 50% or more women in their 2020 new partner classes.

• In 2018 the American Law 100 ranked Wachtell Lipton as the number 1 in Profit Per Equity Partner (PPP), being 6,530,000$.

Hence, when it comes to ‘whitewashing’ one’s image and a law firm that has worked in critical sectors that touch on social aspects, why not hire the best?

Second Step: Now, coming to Grant Thornton.

Adani has exclusively picked the century old and the world’s seventh-largest accounting network to establish credibility; it already has an association with Indian government projects – the firm has provided technical assistance for India’s Clean Ganga mission. 

And they are also strategic advisors for the NITI Aayog and help it in the area of more efficient public investment.

Hence, again if there’s already a framework within which it is working with the Indian govt, then it makes sense for the Adani group to harness its capabilities!

However, there is one worn-out feather in this auditing firm’s cap, which is its history of faulty audits.

And not one but many – last year, the British regulator imposed a fine on Grant Thornton of more than $1.5 million over a faulty audit of Sports Direct. 

Why? Because it failed to mention one critical point: a delivery firm for Sports Direct was a related party managed by the founder Mike Ashley’s brother.

In yet another case, it was charged with a penalty of more than $2.8 million for missing significant issues in its audit of Patisserie Valerie, which ultimately collapsed. 

Grant Thornton was, in the above-mentioned case, was found guilty of not questioning the information that was provided by the firm’s management. 

However, in India, Grant Thornton India faced scrutiny from the CBI in 2018 for an inflated valuation of Kingfisher Airlines, valuing it at Rs 4,100 crore.

Ultimately, when lenders conducted their own calculations of the firm owned by now-fugitive Vijay Mallya, they found that it was worth only Rs 160 crore. 

Conclusion: Gautam Adani and Adani Group, managed by close-knit family members, may have appointed the services of the world’s most well-known and biggie players in their respective fields –

Wachtell, for its stupendous accolades in the social issues arena and Grand Thornton, perhaps because it already works with the Indian government on many projects, despite the fact that the firm has been penalized for faulty audits in foreign countries, but will it be penalised in India in case it does a wrong audit of Adani group?

Hence, the web is a carefully constructed one!

But will it be able to bring Gautam Adani and Adani Group back to its original glory and restore investors’ confidence and its tarnished image is yet to be seen!