‘Fraud cannot be obfuscated by nationalism’: Hindenburg’s response to Adani

Fraud cannot be obfuscated by nationalism or a bloated response that ignores every key allegation we raised, Hindenburg Research said on Monday hours after Gautam Adani group likened the damaging allegations by the US short seller to a “calculated attack” on India.

The US-based investment research firm said the Adani Group “predictably tried to lead the focus away from substantive issues and instead stoked a nationalist narrative.”

In a strongly-worded response, Hindenburg Research alleged that the Adani Group has “attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself.”

“We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future. We also believe India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”

“We also believe that fraud is fraud, even when it’s perpetrated by one of the wealthiest individuals in the world,” it further stated.

A scathing report by Hindenburg Research claiming brazen stock manipulation and accounting fraud scheme by Adani Group led to a bloodbath at Dalal Street as the ports-to-energy conglomerate lost nearly $50 billion in market value. In a 413-page response, Adani Group said the report was driven by “an ulterior motive” to “create a false market” to allow the US firm to make financial gains.

Of the 88 questions raised by Hindenburg, 65 of them relate to matters that have been duly disclosed by Adani portfolio companies, Adani Group said.

“Of the balance 23 questions, 18 relate to public shareholders and third parties (and not the Adani portfolio companies), while the balance 5 are baseless allegations based on imaginary fact patterns.”

Hindenburg said Adani failed to specifically answer 62 of the 88 questions raised by the firm and of the questions it did answer, the group “largely confirmed or attempted to sidestep its findings.”

“Instead, it mainly grouped questions together in categories and provided generalized deflections.,” it said.

“In other instances, Adani simply pointed to its own filings and declared the questions or relevant matters settled, again failing to substantively address the issues raised.”

Hindenburg’s response came ahead of the final few days of a $2.5 billion share sale by Adani Enterprises Ltd., which received overall subscriptions of 1% on Friday.

Concerns have been raised over the exposure of India’s top public sector banks and state insurer to the Adani Group which is facing its toughest test yet after Hindenburg Research characterized its meteoric rise as “the largest con in corporate history.”