Adani Group releases 413-page response to Hindenburg; “fraud cannot be masked by nationalism,” says the American short-seller: The Tribune India


New Delhi, 30 January

US short-seller Hindenburg Research has rejected Adani Group’s charge that its report was an attack on India, saying a “fraud” cannot be clouded by nationalism or a bloated response that ignored answers to key allegations.

Commenting on the 413-page response the Adani Group issued late on Sunday night in response to its report, Hindenburg said it believed India was a vibrant democracy and an emerging superpower with an exciting future, and it was the Adani Group that was holding it back through “systematic looting”[ads1];.

Hindenburg stood by his report last week which said the two-year investigation found the Adani Group “engaged in a brazen share manipulation and accounting fraud scheme spanning decades”.

Hindenburg said the response from the conglomerate run by Asia’s richest man Gautam Adani “opened with the sensational claim that we are the ‘Madoffs of Manhattan'”.

It said Adani claimed it had committed a “flagrant violation of applicable securities and foreign exchange laws”. “Despite Adani’s failure to identify such laws, this is another serious allegation which we categorically deny,” it said.

The Adani group had on Sunday evening likened the damning allegations by Hindenburg to a “calculated attack” on India, its institutions and growth history, saying the allegations are “nothing but a lie”.

It said the report was driven by “an ulterior motive” to “create a false market” to allow the US firm to make financial gains by dragging down share prices. The document is “a malicious combination of selective misinformation and hidden facts linked to baseless and discredited claims of ulterior motives,” it said.

“This is fraught with conflicts of interest and intended only to create a false market for securities to enable Hindenburg, an admitted short seller, to book massive financial gain through improper means at the expense of countless investors,” it said, questioning its credibility and Hindenburg’s ethics.

Hindenburg responded, saying the Adani group “predictably tried to divert the focus away from material issues and instead fueled a nationalist narrative”.

“The Adani group has sought to conflate its meteoric rise and the wealth of chairman Gautam Adani with the success of India itself,” it said.

“We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe that India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting nation.” Saying that “fraud is fraud even when committed by one of the richest people in the world”, it said Adani’s ‘413-page’ response only included about 30 pages focused on issues related to the report.

“The rest of the response consisted of 330 pages of court records, along with 53 pages of high-level financial information, general information and details of irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables,” it said.

“Our report asked 88 specific questions of the Adani Group. In its response, Adani failed to specifically answer 62 of them. Instead, it mainly grouped questions into categories and gave generalized deflections.”

It then went on to repeat its allegations and how the Adani group had failed to respond to them.

The report by the small New York firm that specializes in short selling saw Adani Group lose more than $50 billion in market value in just two trading sessions last week, and Adani itself lost more than $20 billion, or about a fifth. of his total wealth.

In the report, Hindenburg called out the conglomerate’s “substantial debts”, which include pledging shares for loans; that Adani’s brother Vinod “manages a vast maze of offshore shell entities” that move billions into group companies without required disclosure; and that its auditor “hardly seems capable of complex audit work”.

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