Fresh Allegations Surrounding India’s Adani Group: Implications and Caution

India’s Adani Group is facing fresh controversy as a new report alleges that the group used “opaque” funds to manipulate share prices of its own companies. The report claims that the group invested millions of dollars in publicly traded stocks through offshore structures, with two individual investors allegedly buying and selling the stocks on its behalf. The Adani Group has strongly denied these allegations, calling them “meritless”.

The report, published by the Organized Crime and Corruption Reporting Project (OCCRP), has been covered by prominent news outlets such as The Guardian and Financial Times. The Adani Group operates in various sectors, including commodities trading, airports, utilities, ports, and renewable energy, both in India and other countries. Led by billionaire Gautam Adani, who is ranked 24th on the Forbes billionaires list, the group has faced ongoing allegations of benefiting from political ties with Indian Prime Minister Narendra Modi, which Adani denies.

This latest controversy follows a major scandal earlier this year when Hindenburg Research accused the Adani Group of stock manipulation and accounting fraud. Hindenburg also alleged that the group used overseas entities and shell companies to bolster its share prices. The group vehemently denied these claims, but its shares suffered significant losses in market value, leading to the cancellation of a proposed share sale. The Indian market regulator is currently investigating these allegations under the supervision of a panel appointed by the country’s Supreme Court.

According to OCCRP’s report, two investors with “close ties to the Adani family” traded hundreds of millions of dollars’ worth of Adani Group stock. The report does not provide evidence that the funds used for these investments came directly from the Adani family. However, it suggests that the trading was coordinated with the family, raising legal questions about whether the investors should be considered acting on behalf of the Adani “promoters”, referring to majority owners of a business in India.

While the Adani Group has questioned the timing of the report and dismissed it as “suspicious, mischievous, and malicious”, the allegations could have significant implications. If proven true, they could further damage the group’s reputation, lead to regulatory actions, and result in additional losses in market value. Investors may become cautious about the group, impacting its access to capital and potential partnerships. Moreover, the political ramifications of these allegations on the close association between Gautam Adani and Prime Minister Narendra Modi could not be discounted.

However, it is important to note that the BBC has not independently reviewed these allegations, and there is no public response from the two investors mentioned in the report. It is crucial to await further investigations and legal processes to ascertain the veracity of these claims.

In light of this news, investors and stakeholders should exercise caution and closely monitor any developments related to the Adani Group. It would be prudent to review their investment portfolios and reassess the associated risks. Businesses and individuals considering partnerships or transactions with the Adani Group should conduct thorough due diligence to ensure compliance with regulations and mitigate potential risks. Transparency and corporate governance will be key factors for the group to regain trust and maintain long-term stability in the market.