The renowned short-selling US firm, Hindenburg Research (HR) is causing a $51 billion dollar stir across the Pacific. One of India’s largest conglomerates, Adani, has been on the receiving end of criticism from Hindenburg for allegedly illegal behavior that has resulted in Adani’s market capitalization plummeting $10’s of billions in USD terms within the past two trading days.
The alleged illegal practices within the Indian conglomerate include money laundering, stock manipulation, and accounting fraud that have occurred over the past few decades. In their report, HR stated that the Adani Group has been the focus of multiple government investigations which have alleged money laundering, theft of taxpayer funds, and corruption, totaling an estimated U.S. $17 billion. HR also claims that the Adani family members have cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an attempt to generate fake or illegitimate turnover and to siphon money from the listed companies.
Adani is taking the fight head on. The swift, 413 page Adani Rebuttal characterizes all accusations against the company and the related stakeholders as false. The conglomerate has sternly denied any wrongdoing and has threatened to take legal action to defend itself. Jatin Jalundhwala, Adani’s head of legal, stated: “We are deeply disturbed by this intentional and reckless attempt by a foreign entity to mislead the investor community and the general public, undermine the goodwill and reputation of the Adani Group and its leaders, and sabotage the [Follow-on Public Offering] from Adani Enterprises…We are evaluating the relevant provisions under US and Indian laws for remedial and punitive action against Hindenburg Research.” The acrimonious feelings were mutually shared by Hindenburg Research.
Despite potential blowback, Hindenburg is actually welcoming a legal battle with open arms. Quoting the NY-based firm directly: “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.” Whatever the odds are of a legal dispute, HR seems to want more than publicity for what they consider a massive fraud in the making.
Our response to Adani: pic.twitter.com/6NcFKR8gEL
— Hindenburg Research (@HindenburgRes) January 26, 2023
Irrespective of outcome, both Adani & HR look set for a lengthy financial and legal batle.