Adani Group: Here’s why India’s richest man is also India’s biggest con man

HYDERABAD: Gautam Adani, the owner of the Adani Group conglomerate, recently became the third richest man in the world and the richest man in India. With seven public listed companies – Adani Enterprises Ltd, Adani Power, Adani Ports and SEZ Ltd, Adani Total Gas Ltd, Adani Green Energy, Adani Transmission and Adani Wilmar, the market value of the Adani group has become USD $78.02 billion and market capitalisation of over USD $210 billion.

However, Hindenburg research, has claimed that it has conducted a two-year-long investigation and asserted that Adani group has indulged in accounting fraud and “engaged in brazen stock manipulation” over several decades.

The biggest revelation from the investigation by Hindenburg research is that the business tycoon has amassed a net worth of close to USD 120 billion – adding a straight USD 100 billion in just over three years through jacking up stock price to the tune of 819 percent.

The Hindenburg alleged that the Adani Group’s seven key listed companies have “85 percent downside purely on a fundamental basis” due to over-the-roof valuations. Large amounts of debts were raised by pledging the inflated stocks by putting the entire group on the edge. As many as eight out of 22 business leaders in the group are from Adani family with a view to having a stranglehold on the financial decisions of the company.

The Adani Group has been growing the size of its pockets through money laundering, theft of tax payers’ money, scams and unlawfully circulating funds.

Artificial turnover through diamond trade schemes

The Adani brothers – Gautam Adani, Vinod Adani and Rajesh Adani, have all been booked for being the centre of import/export of diamonds, which involved generating artificial turnover using their offshore shell companies. Most of these diamond schemes have no accountability.

Round tripping of cash through offshore funds and entities

The eldest brother Vinod Adani has been described as an “elusive figure”. It was identified in the Hindenburg research that Vinod Adani and his close associates controlled around 38 Mauritius shell entities, many of which do not have signs of operations, employees, office addresses or contact numbers. However, these offshore entities have “collectively moved billions of dollars into Indian Adani publicly listed and private entities, often without required disclosure of the related party nature of the deals.”

“The Vinod Adani-owned 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.”

The Money from the Adani owned offshore trusts goes into the offshore Mauritius companies, who again invest in the Adani stocks to internally circulate the money back into the Adani family.

According to Bloomberg, five supposedly independent entities, all investments funds controlled by the same company named Monterosa Investment Holdings are parking USD$ 4.55 billion shares of the Adani Group. These five companies are operating with the same address, contact numbers, and same overlapping nominee directors.

Manipulating shares

Evidence of stock manipulation in Adani listed companies shouldn’t come as a surprise. SEBI has investigated and prosecuted more than 70 entities and individuals over the years, including Adani promoters, for pumping Adani Enterprises’ stock.

As per law, over 25 percent of the shares should be owned by non-promoters of the company, i.e someone outside the company. In the case of the Adani group, the non-promoters were found to be the offshore shell companies of the Adani group.

Four of the Adani companies are also under the threshold of being delisted due to not having enough non-prompters as stockholders.

The Adani company has also taken multiple loans from offshore entities. The purpose and need of the loans remains undisclosed. The family also has methods to re-incorporate the company’s money back into its own businesses. SEBI, according to sources, is still continuing investigation on how the shares are divided between the promoters and non-promoters of the company and who exactly are the non-promoters. The role of Adani groups offshore entities is also still not completely understood.

All that is clear from the research of hindenburgresearch.com is that the Adani group is pulling the largest con of India.