A Soft Target?

Politics and business go hand in hand. Globally, business houses perceived to be close to the ruling dispensation or the prominent political parties are often highly vulnerable, especially when elections are around the corner. In India, Reliance Industries in the 1980s and 90s was a soft target of the global cabal and the local media. Currently, it is the Adani Group. More than Adani, Hindenburg Research now is a household name in India since it managed to trigger a $125-billion stock rout with mere allegations. Such popularity will undoubtedly attract clones.

Sources say that agencies in India involved with stock market-related investigations have learned that an organisation known as Organised Crime and Corruption Reporting Project (OCCRP), which is infamous for its links to notorious stock market short-seller George Soros, was planning a series of reports on the Adani Group.

Time is of the essence for short-sellers in the stock market, and Hindenburg claimed that it had shorted Adani group-linked instruments in the overseas market before it published its report. Hindenburg had published its report just when Adani's mega follow-on public offer worth more than Rs 20,000 crore (over $3 billion) was to open. Similarly, OCCRP's report too is being planned when the Supreme Court will be taking cognizance of Adani-related probe by market regulator SEBI.

The OCCRP Backers
That Soros is a Modi hater and rejoiced at the Hindenburg attack on Adani Group is a secret revealed by the man himself at an economic forum when he openly said that the attack on Adani would weaken Modi's hold on the government. But a look at how he and the fund linked to another global financier, Rockefeller, who was infamous for the 1929 US market crash, fund OCCRP lays bare the story in itself.

OCCRP, which calls itself "an investigative reporting platform formed by 24 nonprofit investigative centre's spread across Europe, Africa, Asia and Latin America'', identifies the Open Society Foundations of George Soros as one of the institutional donors. Others include Ford Foundation, Rockefeller Brothers Fund and Oak Foundation. Akin to Soros, the control of leftwing philanthropists over Ford Foundations too is a well-known fact. Further, as per OCCRP's own website, one of its associates in India is Anand Mangnale, who worked with online portal Newsclick.in prior to joining OCCRP in 2021. Newsclick has been identified as a pro-China-funded news website operating in India.

The Gameplan
OCCR, which claims to be a network of global investigative journalists, has been trying to cajole Indian media houses and a few in the global arena to publish stories that it claims to have dug up on the Adani Group, the sources said. According to people in the know, part of OCCRP's focus is on the same related-party transactions (RPTs) of the Adani Group, which were mentioned in the Hindenburg report.

As per a few investigators privy to what OCCRP was planning, their story mainly relates to a case by the Directorate of Revenue Intelligence (DRI) with regard to over invoicing, when the Congress-led UPA government was in power in the Centre. This apart, the reports are also likely to rake up the same transactions involving Vinod Adani, elder brother of Adani Group founder Gautam Adani -- the same transactions that Hindenburg Research had mentioned in its report. On pages 34 to 37 of its report, Hindenburg Research had mentioned how Adani Group re-routed nearly a billion dollars in Indian rupees that it had generated via over-invoicing in India to offshore havens and how the same money made its way back to pump up Adani stocks via the use of Emerging India Fund and Emerging Market Resurgent Fund (mentioned on page numbers 34, 36 and 37 in the Hindenburg report).

But what Hindenburg had failed to highlight in its report is that the basic premises of the re-routing story that it had traced was based on the DRI case, which was dismissed by the adjudicating authority of the DRI in 2017 and even the Supreme Court in March 2023.

Related-party Deals
Still, market regulator SEBI too has investigated the RPTs raised by the Hindenburg report and there were some 6,000 transactions on which the report had raised suspicions. SEBI’s MMPS rules specify the minimum float that listed companies should have. Currently, the rules suggest promoters should hold not more than 75 per cent stake in a listed company and the rest should be public float. Hindenburg had alleged that Adani had circumvented SEBI’s minimum public shareholding (MPS) norms by way of round tripping and using certain FPIs (foreign portfolio investors) as a front. But forget SEBI, even Hindenburg has failed to give any iota of proof on how the FPIs were acting as a front for Adani and that the beneficial ownership of the funds in question was linked to the Adani Group.

In fact, the Supreme Court-appointed committee, which was to check if there were any regulatory failures on part of SEBI with regard to the probe into the Adani Group, has labelled the MPS rules in listed companies as “having a chequered history” that were subject to frequent and repeated changes.

"Having adopted the path of making explicit situations prospectively, the path testing the principles underlying the regulations governing RPTs was abandoned. That being so, it would be legally infeasible to attack past transactions on the standards that have been made applicable with prospective effect," the committee appointed by the apex court had said in its report on page no 124.

Price Manipulation
Like Hindenburg, OCCRP is expected to reiterate that Adani Group stocks were manipulated using the FPIs as a front and with the help of RPT linked to Vinod Adani-related entities, say sources. Again, going the Hindenburg way on this issue of price manipulation would be a mundane task without providing evidence beyond doubt since the alleged transactions involve multiple jurisdictions.

One must not forget that over the past 8-9 months since the drama around Adani Group stocks and the Hindenburg report played out in the public, the stock markets factored in the seriousness of Hindenburg's allegations on the commercial facets of the transactions in question and decided to reprice the Adani Group stocks, which are now up significantly from February lows. In light of this, how markets will treat another Hindenburg-like report is quite obvious.

Palak Shah

BW Reporters The writer is author of the book: The Market Mafia - Chronicle of India’s High-Tech Stock Market Scandal & The Cabal That Went Scot-Free. Palak has been a journalist in Mumbai for nearly two decades now. He has worked for most premier pink papers including The Economic Times, Business Standard and The Financial Express and The Hindu Business Line. He was drawn to crime reporting at the age of 19 but a few years in the field told him that the fabric of crime had changed and the organised gangs, as Mumbai had witnessed during the eighties, no longer existed. It was business and markets that dominated the scenario. His passion to unravel the intricacies of the ‘white money’ economy led Palak to the world of finance and regulations.