India’s Richest Man Accused of Pulling the ‘Largest Con in Corporate History’

Billionaire Gautam Adani has slipped from being the world’s third richest man to the seventh, after an activist investment firm released a report Tuesday accusing his company, Adani Group, of “brazen” stock manipulation and accounting fraud worth $218 billion, wiping $27.9 billion from his personal net worth since the start of the year.

Hindenburg Research, which in the past has shorted—or bet against—companies like electric truck maker Nikola Corp and Twitter, said it holds short positions in Adani companies through U.S.-traded bonds and non-Indian-traded derivative instruments.

Tuesday’s report sent shares of Adani Group’s flagship company and affiliates tumbling, taking a hit of more than $50 billion since then, and forcing the company to issue a strong denial of its contents.

Below, what to know about Adani and the corporate corruption allegations.

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Who is Gautam Adani?

Gautam Adani is a self-made billionaire, and India’s richest man, with a net worth of roughly $118 billion as of April 2022. Much of this wealth was accumulated during the past three years through his company Adani Group, as the share prices of his key listed companies climbed, pushing the billionaire’s rank to the third-richest man in the world, behind Elon Musk and Jeff Bezos.

The industrialist began as a commodity trader in the 1980s before he founded 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 and cable centers and the manufacturing of defense goods. It plans to expand further through a $70 billion investment in green energy businesses in the coming year.

The company’s success has often been linked to lucrative government concessions, thanks to Adani’s close ties 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 Hindenburg’s findings reveal?

Among other allegations, the report says that Adani Group engaged in stock price manipulation and accounting fraud over the course of decades, and found evidence that the group’s “7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations.” It also said that substantial debt puts the group on “precarious financial footing.”

The report names several family members—like Gautam Adani’s brothers, Rajesh and Vinod Adani, as well as associates of the Adani Group—for their involvement in major bribery and tax evasion cases. Members of the Adani family have been the subjects of past corruption investigations carried out by the Securities and Exchange Board of India (SEBI) and the Directorate of Review Intelligence. The Hindenburg report also claims that Adani family members allegedly cooperated in the creation of offshore shell entities worth $4.5 billion through forged documents, primarily in tax-haven jurisdictions like Mauritius, the UAE, and the Caribbean islands. Hindenburg said that SEBI was still investigating a case in Mauritius in September 2022, but that no action has been taken against the group so far.

Hindenburg said the report’s findings were based on interviews with dozens of individuals, including former senior executives at Adani Group, thousands of documents, and due diligence site visits in almost half a dozen countries.

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How has the Adani Group responded to the allegations?

Adani Group’s chief financial officer Jugeshinder Singh said in an official statement Wednesday that the company was shocked by the report, calling it a “malicious combination of selective misinformation and stale, baseless, and discredited allegations.”

Adani Group did not address specific allegations in its official statement but said it has always been in compliance with the law. The conglomerate also said that the timing of the report suggested malicious intent to “undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises,” referring to the group’s plans for increasing the amount of freely traded shares.

On Thursday, Adani Group said in a new statement that it is considering legal action against Hindenburg. “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” said Adani Group Legal Head Jatin Jalundhwala. He added that the report created “volatility in Indian stock markets” that was “of great concern and has led to unwanted anguish for Indian citizens.”

Hindenburg has dared Adani Group to sue, saying it would open the company to further scrutiny.

The report was published days before bidding for a $2.5 billion stock sale for Adani’s secondary shares begins Friday, which will include anchor investors like the Abu Dhabi Investment Authority and Morgan Stanley.

One investor told the Financial Times they are “aware” of Hindenburg’s report and are “taking it into consideration.”

Correction, Jan. 29

The original version of this story incorrectly said that the report by activist investor group Hindenburg alleged that Adani Group’s key listed companies fell in value by 85%. The report said that those companies had an “85% downside,” which it said was due to high valuations.