Congress seeks probe over Hindenburg report on Adani Group

Party asks the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to investigate the allegations

NEW DELHI | Updated: 27 January, 2023 5:00 pm IST
Adani Group chairman Gautam Adani (file photo)

Following the release of the Hindenburg Research report, which sent Adani Group stocks plummeting on Friday, the Congress attacked Prime Minister Narendra Modi and the Bharatiya Janata Party (BJP)-led central government over their alleged close connections with the business group.

The party also sought serious investigations into the matter by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

Reacting to the development that created uproar in the business world, Congress General Secretary (Communications) Jairam Ramesh said, “Normally a political party should not be reacting to a research report on an individual company or business group prepared by a hedge fund.”

“But the forensic analysis by Hindenburg Research of the Adani Group demands a response from the Congress party. This is because the Adani Group is no ordinary conglomerate: it is closely identified with Prime Minister Narendra Modi since the time he was Chief Minister (of Gujarat),” Ramesh said.

The senior Congress leader said that, furthermore, the high exposure of financial institutions such as the Life Insurance Company of India (LIC) and the State Bank of India (SBI) to the Adani Group has implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system.

“It is worth noting that earlier reports had described the Adani Group as deeply overleveraged. The allegations require a serious investigation by those who are responsible for the stability and security of the Indian financial system, viz., the RBI and the SEBI,” the Rajya Sabha MP said.

He also said that the Hindenburg report alleges “brazen stock manipulation” and “accounting fraud” by the Adani Group via “a vast labyrinth of offshore shell entities”.

“The evolution and modernisation of India’s financial markets since the 1991 reforms have aimed to improve transparency and level the playing field for domestic and foreign investors,” the Congress leader said. He added that it has specifically sought to increase the transparency of financial flows into the country – to prevent round-tripping and money laundering by actors that could include criminals, terrorists and hostile countries – and to reduce dependence on offshore tax havens.

S Jairam Ramesh during Bharat Jodo Yatra in J&K


“For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo? Will SEBI investigate these allegations to the fullest and not just in name?” he asked.

Training his guns at the central government and the Prime Minister, Ramesh further said that the allegations of financial malfeasance would be bad enough, but what is worse is that the Modi government may have exposed India’s financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC, SBI and other public sector banks.

“These institutions have liberally financed the Adani Group even as their private sector counterparts have chosen to avoid investing because of concerns over corporate governance and indebtedness,” he claimed.

Ramesh further said that as much as eight per cent of LIC’s equity assets under management, amounting to a gigantic sum of ₹74,000 crores, are in Adani companies and comprise its second-largest holding.

“State-owned banks have lent twice as much to the Adani Group as private banks, with 40 per cent of their lending being done by SBI. This irresponsibility has exposed the crores of Indians who have poured their savings into LIC and SBI to financial risk,” he said.

Raising caution over the allegations made in the Hindenburg report, Ramesh said that if, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices.

“Indians are increasingly aware of how the rise of Modi’s cronies has exacerbated the problem of inequality, but they need to understand how this has been financed by their hard-earned savings. Will the RBI ensure that risks to financial stability are investigated and contained? Are these not clear-cut cases of “phone banking”?” he asked.

The Congress leader said that none of this will be easy. “In recent years, the Adani Group has built monopolies in ports and airports and become an overwhelmingly dominant player in power, roads, railways, energy and media.”

“In perhaps the most egregious case of crony capitalism, the previous operator of Mumbai’s Chhatrapati Shivaji Maharaj International Airport, India’s second busiest airport, was raided by the Enforcement Directorate (ED) and the Central Board of Investigation (CBI) after it rejected an offer by the Adani Group. The operator agreed to sell the airport to Adani a month later and it is a mystery what happened to the ED and CBI cases thereafter,” Ramesh alleged.

Urging both SEBI and RBI to investigate the allegations, Ramesh said, “It is incumbent on the Congress party as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest.”

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