Adani Group, the allegations of fraud become a diplomatic case: “India under attack” – Corriere.it

If you attack me, you attack India. This is the backbone of the defensive line chosen by theAdani Group, the Indian conglomerate ended up in a stock market storm after the New York company Hindenburg Research accused her of “manipulation of securities (of her companies, ed) and accounting fraud”. The group controlled by Gautam Adani, the richest man in Asia, has lost more than 60 billion dollars in market valuation since Hindenburg made his accusations in a hundred-page document on January 24, asking answers to 88 questions. Mister Adani himself saw his stock market assets fall by around twenty billion. Now, he’s gone on the counterattack.

On the merits, he in turn published a 413-page document in which he responded to about 65 of the objections raised by the American financial company. Above all, however, he argued that what has turned the group upside down “is not merely an unwarranted attack on a specific society but a calculated attack on India, on the independence, integrity and quality of Indian institutions and on the history of growth and ambitions of India”. The company also released a video in which the group’s chief financial officer, Jugeshinder Singh, appears with a country flag beside him and claims the allegations are “a malicious combination of selective disinformation” and have already been vetted and dismissed “by plus other Indian courts.”

Furthermore, in an interview with the financial newspaper Mint, Singh also spoke of the fact that New Yorkers’ allegations have been echoed by many in India, which he says makes the situation resemble that of the Jallianwala Bagh massacre, in 1919, at the time of the British Raj: «In Jallianwala Bagh – he said – only an Englishman gave an order and the Indians fired on other Indians. Am I therefore surprised by the behavior of some Indian countrymen? No”. In short, the reaction of the Adani Group, in its excess of rhetoric, shifts the question from strictly business to a question of nationalist defence. He makes it a political case. Hindenburg replied that he believed that “India’s future is hampered by the Adani Group, which wrapped itself in the Indian flag while systematically plundering the nation.” In short, a skyrocketing clash: Adani Group threatens to appeal to the courts against Hindenburg.

On the merits of the allegations, the Indian group has given a series of answers, most of which say that the points in question are known and have already been addressed in the past. In 413 pages, among other things he naturally claims that he has not manipulated market prices, that he has auditing firms that control the financial statements and that there’s nothing strange about having changed five group finance heads in eight years (something New Yorkers have called a “red flag of danger”). However, more than one Indian financial analyst believes that the explanations are insufficient. Some point out that the companies in the group don’t have analysts who follow and evaluate them, that is, they don’t want to touch them. They note that investment funds are reluctant to buy those stocks. And they suspect that it is the control model of the companies that has led the shares of the Adani Group companies to stratospheric valuations on the Stock Exchange.

The story takes place at a delicate moment for the Indian group: a capital increase of Adani Enterprises is in progress for 2.5 billion dollars; subscriptions close on Tuesday 31 January and until the 30th they were very low, less than 10%. For India and its economy, the ongoing clash is an important test for establishing the country’s position in international business, for verifying how open it is to the transparency criteria used in most of the world. In many ways, India is an obligation for investors and for a number of multinationals who see a market in which they cannot help but be present. However, financial irregularities, if there are any, must be made public and eliminated from the way of doing business, however powerful those responsible for them are. In addition, i suspicions of insider relations of Gautam Adani with Prime Minister Narendra Modi, which according to some observers would have been important in the recent growth of the group, do not facilitate the trust of those who have to put money into the country’s businesses fearing that the choices will then be made with political and not market criteria. If the story is resolved with certainty and transparency, this will be a good reason to wave the glorious Indian flag.