Suspicion is creating chaos in the empire built by the Indian billionaire Gautam Adani, who since last year has become the richest man in Asia.
Adani, 60, saw his fortune jump by more than $40 billion last year, according to the Bloomberg Billionaires Index. While the fortunes of a number of tech billionaires were melting, this leap propelled him into the elite holders of the world's biggest fortunes..
He managed to rank as the second richest person behind Elon Musk, Tesla's CEO. He fell back to finish the year in third place. And he's currently the fourth richest person in the world with a net wealth valued at $113 billion as of Jan. 26, according to the
Now, as he tries to establish himself on the world stage, observers can expect his wealth to dwindle further. That's because for the past two days he's been caught up in what appears to be a nightmare.
Short-Seller Hindenburg's Allegations
The New York investment firm Hindenburg Research has announced that it shorted stocks of the Andani conglomerate through U.S.-traded bonds and non-Indian-traded derivative instruments.
This means that Hindenburg Research, a well-known short-seller, is betting on a short-term drop in the prices of these equities.
The short-seller explains that the bet stems from alleged illegal practices on the part of the Indian tycoon's conglomerate.
"We have uncovered evidence of brazen accounting fraud, stock manipulation and money laundering at Adani, taking place over the course of decades," Hindenburg wrote in a report.
"Adani has pulled off this gargantuan feat with the help of enablers in government and a cottage industry of international companies that facilitate these activities."
The report describes a galaxy of shell entities based in tax havens -- the Caribbean, Mauritius and the United Arab Emirates -- controlled by the Adani family.
"The Adani Group has previously been the focus of 4 major government fraud investigations which have alleged money laundering, theft of taxpayer funds and corruption, totaling an estimated U.S. $17 billion," Hindenburg said.
"Adani family members allegedly cooperated to create offshore shell entities in tax-haven jurisdictions like Mauritius, the UAE, and Caribbean Islands, generating forged import/export documentation in an apparent effort to generate fake or illegitimate turnover and to siphon money from the listed companies."
The Adani Empire responded in two separate statements, one the day after the report was released and the other the following day. It rejects all these accusations and threatens to resort to the legal process to defend itself.
The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India’s highest courts," commented Jugeshinder Singh, Adani Group's chief financial officer, in a statement on Jan. 25.
Adani Threatens 'Punitive Action' in Court
"The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors," said Adani Group's head of legal, Jatin Jalundhwala, in another statement on Jan. 26.
"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," he continued.
Hindenburg is doubling down.
"Regarding the company's threats of legal action, to be clear, we would welcome it," the short-seller reacted. "We fully stand by our report and believe any legal action taken against us would be meritless."
Market Rout in Adani Company Shares
In the meantime, Adani companies are seeing a stock-market rout. Over the past two trading sessions, the Adani empire has lost a total of $51 billion in market capitalization, according to Bloomberg News.
Adani Enterprises, the flagship of this empire, for example, lost nearly a fifth (more than 19%) of its value on Friday. Units like Adani Green Energy and Adani Total Gas plunged 20%, the daily limit allowed. Adani Power lost 5%. Adani Port’s share price dropped 13.8% and Adani Transmission fell 19.47%.
The sales of shares in Adani-related entities were widespread, with large trading volumes. The companies are listed on Mumbai.
Friday's falls follow those of Wednesday, the first session after Hindenburg published its report. India's stock market was closed on Thursday, Jan. 26.
This stock-market rout also affects Gautam Adani's fortune. According to Bloomberg, this wealth should drop below $100 billion once the calculations are made by Jan. 27. It would be around $93 billion. At this level, Adani would have lost about $26 billion of his fortune since the publication of the Hindenburg report.
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