Gautam Adani鈥檚 (GA) US$218 billion vast imperium specialises in transport, infrastructure and mining, with far reaching feelers that have made their mark in a number of countries.
Adani鈥檚 companies have made a name for themselves: employment laws have been breached and human rights abuses have featured.聽 Governments and regulators have been lied to. No environment is ecologically safe from the company鈥檚 activities, despite their assertions to the contrary. The CEO has also cultivated politicians across the globe.
But despite their efforts, Adani and key members of the GA group, of which eight hails from the family, have not been immune from criticism. A number of reports from non-government organisations and activists document a bad record.
But the evaluation from US investment firm Hindenburg Research, were published last month, approached the conduct of the conglomerate Adani Group a bit differently.
Hindenburg Research鈥檚 central allegation is that Adani has 鈥渆ngaged in a brazen stock manipulation and accounting fraud scheme over the course of decades鈥.
Having spoken to dozens of individuals, including former senior executives, conducting a review of thousands of documents and visiting a number of sites across half a dozen countries, the picture that emerges is even uglier than first thought.
The image of financial security and reliable solvency comes across as a fiction. In addition to grossly inflated valuations, the Adani companies have taken on substantial debt. Shares of inflated stock have been pledged to secure loans.
A sense of the false accounting picture given by Adani鈥檚 accounts can be gathered from the practices of Gautam Adani鈥檚 younger brother, Rajesh, who was accused by the Directorate of Revenue Intelligence (DRI) for being a key figure in a diamond import/export trading scheme in 2004鈥05.
Rajesh had used a number of offshore shell companies to generate artificial turnover. Gautam鈥檚 brother-in-law, Samir Vota, was in on the scheme, allegedly making a number of false statements to the regulators.
The saga of alleged corrupt behaviour includes the activities of Vinod Adani, Gautam鈥檚 older brother. This person allegedly plays a key role in managing dozens of shell entities that serve the functions of stock manipulation and money laundering. The latter part is achieved through using money from Adani鈥檚 private companies to bloat the balance sheets of the listed companies.
Adani鈥檚 response to the claims 鈥 413 mostly irrelevant pages 鈥 was to accuse the US firm of being in 鈥渇lagrant breach of applicable securities and foreign exchange laws鈥, conduct becoming the 鈥淢adoffs of Manhattan鈥.
A nationalist narrative was also injected into the rebuttal: to attack the Adani Group was nothing less than attacking Indian success itself.
Hindenburg Research鈥檚 to such bluster was chastening.聽 India, 鈥渁 vibrant democracy and an emerging superpower with an exciting future鈥, was being 鈥渉eld back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation鈥, it said.
Since Hindenburg Research released its findings on January 24, Gautam Adani鈥檚 inflated personal wealth has been pared back. From being the third richest man, he is now missing from the top 20.
Within days, the conglomerate鈥檚 market value was wiped to the striking sum of US$113.6 billion. The company has promised to prepay loans with $1.1 billion and call off its secondary share sale. The collateral used by the companies to secure funds has also suffered a fall in value.
Despite the number of allegations directed at Gautam, the family and his associates, another country and its government have fallen under the group鈥檚 spell.
Israeli Prime Minister Benjamin Netanyahu and Adani on January 31 to confirm the US$1.18 billion sale of the port of Haifa that had been agreed earlier in the month.
Netanyahu hopes to leverage investments made in the Haifa project to create a trade route linking the Mediterranean and the Gulf, bypassing the Suez Canal. In the of the Israeli Prime Minister, Haifa would 鈥渂ecome the entry point and exit point for a vast number of goods that will reach the Mediterranean and Europe directly, without having to go around the Arabian Peninsula鈥.
To do this, the Abraham Accords are being touted as the economic centrepiece, enabling rail links to be established in Saudi Arabia, through Jordan and ultimately to Haifa port itself. But Netanyahu, himself no creature to accusations of corruption, is facing a figure and business partner in freefall.
[Binoy Kampmark currently lectures at RMIT University.]