Hindenburg Research, a financial research firm, has recently published a short report on the Adani Group, a 17.8 trillion INR (218 billion USD) Indian conglomerate, alleging that the company has engaged in stock manipulation and accounting fraud over the course of decades. The report claims that Gautam Adani, the founder and chairman of the Adani Group, has amassed a net worth of roughly $120 billion, largely through stock price appreciation in the group's 7 key listed companies which have spiked an average of 819% in the last 3 years.
The report states that the research involved speaking with dozens of individuals, including former senior executives of the Adani Group, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries. Even if the findings of the investigation are ignored, the report claims that the 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations. Additionally, these key listed Adani companies have taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing, with 5 out of 7 key listed companies reporting current ratios below 1, indicating near-term liquidity pressure.
The report also highlights that the group's very top ranks and 8 out of 22 key leaders are Adani family members, a dynamic that places control of the group's financials and key decisions in the hands of a few. A former executive described the Adani Group as “a family business”. The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated $17 billion. The Adani family members have allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies.
The report also highlights that Gautam Adani’s younger brother, Rajesh Adani, was accused by the Directorate of Revenue Intelligence (DRI) of playing a central role in a diamond trading import/export scheme around 2004-2005. The alleged scheme involved the use of offshore shell entities to generate artificial turnover. Rajesh was arrested at least twice over separate allegations of forgery and tax fraud. He was subsequently promoted to serve as Managing Director of Adani Group. Gautam Adani’s brother-in-law, Samir Vora, was accused by the DRI of being a ringleader of the same diamond trading scam and of repeatedly making false statements to regulators. He was subsequently promoted to Executive Director of the critical Adani Australia division.
The report claims that Gautam Adani's elder brother, Vinod Adani, has been described by media as “an elusive figure”. He has regularly been found at the center of the government’s investigations into Adani for his alleged role in managing a network of offshore entities used to facilitate fraud. The research, which included downloading and cataloguing the entire Mauritius corporate registry, has uncovered that Vinod Adani, through several close associates, manages a vast labyrinth of offshore shell entities. The research has identified 38 Mauritius shell entities controlled by Vinod Adani or close associates. Additionally, entities that are also surreptitiously controlled by Vinod Adani in Cyprus, UAE, Singapore, and several Caribbean Islands have been identified.
Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence. Despite this, they have collectively moved billions of dollars into Indian Adani publicly.
The complete report is available at https://hindenburgresearch.com/adani/