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Gautam Adani considers legal action over baseless allegation of fraud

Adani Group, owned by Indian billionaire Gautam Adani, announced on Thursday that it was considering “punitive and remedial action” against Hindenburg Research for the allegation of fraud against Adani Group which was made public on Wednesday.

The accusation caused the company’s market capitalisation to decrease by approximately $11 billion. 

The company’s position: Adani said that the company had always complied with all laws. The head of Adani Group’s legal team, Jatin Jalundhwala, said:

  • “The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens.
  • “Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research, by their own admission, is positioned to benefit from a slide in Adani shares.
  •  “We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research,” said Adani Group’s head of legal, Jatin Jalundhwala.”

Hindenburg responds: On Thursday, Hindenburg responded to Adani Group’s comments, saying the firm had not addressed “a single substantive issue we had raised.”

It also said it stood by its report and would “welcome” legal action, as any claim against it would be “meritless”. 

  • “If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process. We fully stand by our report and believe any legal action taken against us would be meritless,” the research firm said. 

Support for Hindenburg: Billionaire investor and CEO of Pershing Square Capital Management, Bill Ackman, voiced his support for the short seller firm in a tweet posted shortly before India’s market opened. He said: 

  • “I found the Hindenburg report highly credible and extremely well researched,”

 

The backstory: On Wednesday, Hindenburg charged Mr Adani with “pulling the largest con in corporate history” in its investigation. This occurred days before the proposed public offering of Adani Group shares. 

The research questioned the Adani Group’s ownership of businesses in regions known as offshore tax havens, including the Caribbean and Mauritius. Additionally, it asserted that “substantial debt” held by Adani companies put the entire company on “precarious financial footing.” 

Note that the Adani Group’s flagship firm, Adani Enterprises, is scheduled to begin selling its shares to the public today. There are worries that these scandals could derail its share prices.

About Adani Group: The company operates in a variety of sectors, including commodities trading, airports, utilities, and renewable energy. It is run by Indian billionaire Mr Adani who, according to the Bloomberg Billionaires Index, ranks as the fourth richest person in the world.  

 

  

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