Indian multinational conglomerate Adani Group lost some $100 billion in stock market value after a team of researchers claimed that the firm pulled “the largest con in corporate history.”
The valuation of the firm run by Gautam Adani, who is currently one of the richest men in the world, was artificially inflated by “a brazen stock manipulation and accounting fraud scheme over the course of decades,” according to a two-year investigation from American forensic financial company Hindenburg Research. The analysts spoke to former executives and conducted diligence visits in multiple nations, concluding that Adani Group companies have pledged shares of their stock for loans, assumed massive amounts of debt, and benefited from shell companies established by various family members.
Vinod Adani, the elder brother of Gautam Adani, allegedly controls 38 shell companies located in the island nation of Mauritius, as well as Cyprus, Singapore, the United Arab Emirates, and several Caribbean islands. The firms have negligible online presences and many appear to hire zero employees; the researchers found that efforts to mask the true nature of the companies were “rudimentary,” citing the fact that 13 of the companies’ websites were created on the same day and contain little more than stock photos.
Adani Group is involved in sectors such as port management, electric power, mining, oil and gas, renewable energy, and food processing. Gautam Adani plummeted from the third richest person on the planet to seventeenth following the release of the report last week.
The shell companies exist for stock parking, stock manipulation, 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,” according to Hindenburg Research, which said that the offshore companies comprise many of the largest public holders of Adani Group stock. The report added that Rajesh Adani and Samir Vora, the younger brother and brother-in-law of Gautam Adani, were appointed to executive positions in the empire despite their involvement in alleged offshore diamond trading scams. Indian authorities have launched a number of investigations into the family over the past two decades.
Shares for Adani Enterprises, the flagship publicly traded company operated by Adani Group, have declined more than 52% over the past five days. Hindenburg Research said they took a short position in the company through American-traded bonds and various derivatives.
Adani Group published a document calling Hindenburg Research executives the “Madoffs of Manhattan” and said that their investigation was “a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive.” The company also accused Hindenburg Research of launching an “attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” leading the investors to rebut that the document “largely confirmed our findings and ignored our key questions.”
The economy of India has indeed grown significantly in recent decades despite corruption and a lack of sound institutions. The nation is scheduled to become the world’s third-largest economy in the next decade and most populated nation this year, surpassing longtime geopolitical rival China for the latter distinction.