Hindenburg, OCCRP, et al: Many Open Questions
William Gibson's Neuromancer begins with a succinct description of cyberspace, calling it a "consensual hallucination." The internet of today, indeed, can baffle someone with the pace and frenzy it can create through a single post, trend, or video clip. Now, imagine if these are combined together in a lethal dose to target a person, business, entity, or a combination thereof.
That is precisely what has transpired in the last ten months in which the Adani Group, one of India's leading business conglomerates, has been the target of relentless attacks by certain foreign media houses, so-called and self-proclaimed organized crime-fighting agencies, and certain Indian entities as well.
But the unraveling was equally fast. During the hearing on November 24, the Chief Justice of India expressed dismay over the petitioner's consistent reliance on news reports by a foreign publication and the Organized Crime and Corruption Reporting Project to argue that the entire Indian machinery is somehow lacking in its investigation as directed by the Supreme Court. In a further setback for the petitioners, the Solicitor General of India – Tushar Mehta – said that the OCCRP had received documents relied upon it from an NGO that can be traced back to Prashant Bhushan.
The entire chain of events appears to be a well-oiled machinery working relentlessly to target a business group and derail India's growth story through subtle chaos and confusion. The enormity of this process is baffling when one also takes note of other Indian developments.
Multiple battlefronts against the Adani Group
The last two months also revealed another controversial party working closely to target the central government. The notorious "Cash for Questions" scam involving Mahua Moitra, Member of Parliament, Lok Sabha, from Krishnagar, West Bengal, has been in the news thanks to the detailed revelations by Nishikant Dubey, a BJP MP. The latest revelations against Mahua Moitra, who fiercely criticized the Modi government for favoring Gautam Adani, bring new turns involving journalists, politicians, and businessmen in this case.
Earlier, notorious shortseller Hindenburg Research had alleged that Adani Enterprises and other group entities had "engaged in stock manipulation and accounting fraud over the course of decades." This strongly and negatively impacted the Adani Group, which witnessed a significant decline in their market capitalization by about Rs 1 lakh crore on January 25. Retail Investors- Hard-working Indians, mom and pop store owners, and young and first-time investors suffered losses in billions. Further reports were published by the OCCRP and multiple UK based publications that suddenly found an interest in India. These publications have never shown India in a good light despite all the economic progress and billions lifted out of poverty. For them, it appears to be a colonial overhang to still portray India as a third-world country.
What's next?
The Supreme Court reserved its order in the batch of Public Interest Litigations seeking multiple reliefs. The Court appeared to be hesitant to take any new unfounded accusation or allegation, visible from the fact that it refused the petitioner's plea to initiate an inquiry against the Life Insurance Corporation and State Bank of India. Similarly, the Court duly dismissed unfounded claims challenging the integrity of the Supreme Court-appointed Committee. After all, there has to be an end to a speculative cycle! While the SEBI and other regulatory agencies may investigate this matter further, they will follow the procedure prescribed in law before making bold claims by the OCCRP or Hindenburg.
Interestingly, the Adani Group has continued focusing on its expansion and growth cycle. A few recent steps indicate this. As per the numbers in the public domain, it has reduced its Net debt to run-rate EBITDA for FY23 to 2.8x compared to 3.2x a year ago. Similarly, the equity deployed increased to more than half the total assets.
An even more robust indicator is the faith reposed by Adani Group's investors, including some of the largest sovereign and financial bodies. The Adani Group has raised $9 billion over four years by roping in marquee global investors as part of India's most significant infrastructure investment participation. Adani Cement also completed its refinancing program for acquisition debt taken for Ambuja and ACC through a USD 3,500 million financing package. As per the company, the facility will result in an overall cost saving of ~ USD 300 million for Adani Cements.
In hindsight, we must look and ponder on what the ultimate objective of these entities was. Is there a more devious plan in the offing? Are there more such reports in the pipeline? Who was the ultimate actor behind it? No one can guess. But what's sure is that some questions in this saga will remain open and unanswered.
Upasna Singh is a Lawyer and Co-Founder of the Virina and Rath Foundation
