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Gautam Adani accused of pulling 'the largest con in corporate history' by Hindenburg Research

Gautam Adani, the third richest man in the world, has been accused of participating in the

The world’s third-richest man has been accused of organizing the ‘biggest scam in corporate history’ through India’s Adani Group.

US investor Hindenburg Research, which began shorting the conglomerate through bonds, conducted a two-year investigation into chief Gautam Adani, who is worth $125 billion.

The company alleges that Adani and his family controlled a network of offshore fictitious accounts which they used to commit acts of corruption, money laundering and theft from taxpayers, while siphoning off money from companies they possessed.

“Adani has achieved this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities,” the company wrote in its report released on Tuesday.

The Adani Group immediately denied the allegations and expressed shock at the allegations which cost the company $12 billion in market value and saw its flagship Adani Enterprises plummet nearly 4% on Wednesday.

Gautam Adani, the third richest man in the world, has been accused of participating in the

Gautam Adani, the world’s third richest man, has been accused of participating in the “biggest scam in corporate history” by notorious US investor Hindenburg Research. Adani (left, pictured with his wife Priti) is worth $125 billion through the Adani Group conglomerate

Hindenburg's two-year investigation alleges that Adani, his family and close associates mixed money to manipulate stocks and conceal debts.  Adani is one of India's most powerful men and remains a close ally of Prime Minister Narendra Modi.  The two are pictured in 2019

Hindenburg’s two-year investigation alleges that Adani, his family and close associates mixed money to manipulate stocks and conceal debts. Adani is one of India’s most powerful men and remains a close ally of Prime Minister Narendra Modi. The two are pictured in 2019

Gautam Adani: the third richest man in the world valued at 125 billion dollars

Gautam Adani, 60, is the chairman of the Adani Group, one of the three largest industrial conglomerates in India.

He started his journey as a diamond sorter in Mumbai in the late 1970s before working in his brother’s plastics business in 1981.

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After securing an agreement with Korea, he launched the group’s flagship import-export business, Adani Enterprises.

His business secret, as the Financial Times put it, was simple. “Earn a small amount in one business, then incur heavy debt from its earnings to finance the expansion of another,” the newspaper said.

The group now has interests in ports, power generation and transmission, real estate, cement among a plethora of other industries.

Adani controls India’s largest port, Port of Mundra, and became the country’s largest airport operator after buying a 74% stake in Mumbai International Airport in 2020.

Adani has been accused by critics of leveraging personal connections with Indian Prime Minister Narendra Modi to gain advantages.

With a net worth of $125 billion, Adani ranks only behind French luxury tycoon Bernard Arnault and Tesla CEO Elon Musk.

In his scathing report, Hindenburg questions how the Adani Group has used its offshore entities in tax havens like Mauritius, the Caribbean Islands and the United Arab Emirates, adding that some offshore funds and shell companies linked to the group are “surreptitiously” holding shares in Adani-listed companies.

The short seller alleged that at least 28 of the fictitious entities were operated by Adani’s older brother Vinod or his “close associates”, while Hindenburg pointed to Indian officials’ investigation into allegations of fraud against the group.

According to those responsible for these investigations, Vinod would transfer money from offshore entities to private offshore trusts and family-owned companies. This money would then go to Mauritian entities before being used to invest in Adani Group shares.

“If the Adani Group secretly controls significant amounts of publicly traded stocks without disclosure, the resulting share price of Adani’s listed companies could be easily manipulated to meet the immediate needs of the Adani Group,” Hindenburg concluded.

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The alleged money laundering would not only allow the conglomerate to manipulate stocks, but it would also allow its businesses to “maintain the appearance of financial health and solvency” despite their debt, the short seller added.

Hindenburg said the main listed Adani companies had “substantial debt”, which put the whole group in a “precarious financial situation”.

The short seller claimed shares of seven Adani-listed companies were down 85% on a fundamental basis due to what he called “exorbitant valuations”.

The report also pointed out that the Adani Group has been the subject of four government investigations, alleging that the conglomerate illegally benefited from government tax credit programs.

The research report, Hindenburg said, was based on a two-year investigation that involved speaking with dozens of people, including former Adani Group executives, as well as a review of documents.

Pictured: Investigators explained how Adani and his associates transferred money from their offshore entities to their businesses

Pictured: Investigators explained how Adani and his associates transferred money from their offshore entities to their businesses

Adani Group has denied the allegations against them, saying the report is meant to hurt them ahead of their biggest secondary stock offering scheduled for Friday.

Adani Group has denied the allegations against them, saying the report is meant to hurt them ahead of their biggest secondary stock offering scheduled for Friday.

The Adani Group dismissed the US short seller’s claims as baseless, saying it was time to damage its reputation ahead of a big stock offering.

Adani Enterprises is set to launch India’s largest secondary equity public offering on Friday, aiming to raise $2.5 billion to fund capital expenditures and repay some debt.

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

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“The group has always been in compliance with all laws,” the company said, without addressing the specific allegations made by Hindenburg.

“The timing of the report’s release clearly betrays a brazen and bad faith intent to undermine the reputation of the Adani Group for the primary purpose of harming Adani Enterprises’ upcoming follow-on public offering,” he said. added.

After the report was filed, flagship Adani Enterprises fell 4% before leveling off

After the report was filed, flagship Adani Enterprises fell 4% before leveling off

Adani Transmissions also saw its valuation drop 9% on Wednesday

Adani Transmissions also saw its valuation drop 9% on Wednesday

Adani's new ACC cement plant also saw its shares drop 8%

Adani’s new ACC cement plant also saw its shares drop 8%

Along with Adani Enterprises’ decline, shares of Adani Transmission fell 9%, Adani Ports And Special Economic Zone fell 6.3%. Adani’s ACC cement startup fell more than 8%.

In bond markets, US dollar-denominated bonds issued by Adani Green Energy fell nearly 15 cents to just under 80 cents on the dollar, according to Tradeweb data.

International bonds issued by Adani Ports And Special Economic Zone, Adani Transmission and Adani Electricity Mumbai saw similar declines.

The declines reflected Hindenburg’s findings. The short seller is a leading research firm, known for its report on electric car maker Nikola.

Hindenburg described the company as being built on “dozens of lies”, which led to Nikola founder Trevor Milton resigning as chairman and being convicted of securities fraud.

Nitin Chanduka, a Singapore-based analyst, told Bloomberg: “These are renowned short sellers. Their track record is strong, with recent allegations against Nikola Corp. resulting in a 40% drop in share price.

Chanduka said if the allegations come to fruition, it could lead to “increased regulatory scrutiny and scrutiny given the systemic importance of the Adani Group” in Asia.

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