Sebi gives clean chit to Adani, group on Hindenburg charges

NEW DELHI: Stock market regulator Sebi on Thursday dismissed allegations of stock manipulation against Gautam Adani and Adani group companies by US based short seller Hindenburg Research and said there was no evidence of the group using related parties to route funds to listed companies.

In two orders posted on its website, the Securities and Exchange Board of India (Sebi) said there is no violation of listing agreement or Sebi regulations as the impugned transactions do not qualify as "related party transactions".

"Transparency and integrity have always defined the Adani Group," Gautam Adani said on X after Sebi put out the orders on its website.

Hindenburg claims were baseless: Adani
Hindenburg Research published a report on Jan 24, 2023, against Adani Group which alleged that Adicorp Enterprises, Milestone Tradelinks and Rehvar Infrastructure were used as conduit entities to route funds from various Adani Group companies to fund publicly listed companies - Adani Power and Adani Enterprises.

Sebi said the findings of the investigation revealed that Adani Ports transferred funds as loan to Adicorp Enterprises, which in turn transferred funds as loans to Adani Power. Subsequently, Adani Power repaid the loans to Adicorp Enterprises along with interest which in turn repaid the loans to Adani Ports with interest.

"After an exhaustive investigation, Sebi has reaffirmed what we have always maintained, that Hindenburg claims were baseless. Transparency and integrity have always defined the Adani Group," Gautam Adani said on X after the orders were released.

In another case, Adani Ports transferred funds as loans to Milestone Tradelinks and Rehvar Infrastructure, which in turn transferred funds to Adani Power and Adani Enterprises as loans.

Subsequently, Adani Power and Adani Enterprises repaid the amounts to Milestone Tradelinks and Rehvar Infrastructure, along with interest, which in turn repaid the amounts to Adani Ports with interest. "Thus loans were given and repaid with interest in various tranches during the investigation period," the regulator said.

It said that on merit too, it is held that impugned transactions cannot be classified as manipulative or fraudulent transactions or unfair trade practice since there is no allegation of siphoning off of money or diversion of fund; all the money has come back with interest before the start of the investigation; and the impugned transactions have not been held as related party transactions.

Hindenburg's report against the Adani Group, in Jan 2023, was released just as the group readied to launch its Rs 20,000-crore mega follow-on public offer for flagship Adani Enterprises. The five-year-old firm that researched stocks, debt and crypto currencies, alleged that the group was involved "in a brazen stock manipulation and accounting fraud scheme over the course of decades". Adani Group stocks crashed and investors lost massively, while the report also triggered a massive political slugfest. The Adani Group had quickly rejected the report and called it "a malicious combination of selective misinformation, stale and baseless allegations that have already been tested and rejected" by the SC.

Legal troubles mounted for the group after being indicted by the Department of Justice and the US Securities & Exchange Commission last year and the group came under intense scrutiny from investors.