Hours After the Adani Group published a 413-page rebuttal to allegations of fraud by Hindenburg Research, the US-based short-seller said the statement “ignores key allegations”.
“Fraud cannot be obfuscated by nationalism or a bloated response that ignores every key allegation we raised,” Hindenburg said, standing by its report last week that alleged that the Adani Group “engaged in brazen stock manipulation and accounting fraud scheme” for decades.
Hindenburg said the response by the conglomerate run by Asia’s richest man Gautam Adani “opened with the sensationalistic claim that we are the ‘Madoffs of Manhattan'” and failed to “specifically answer” 62 of 88 questions. “Of the questions it did answer, the Group largely confirmed or attempted to sidestep our findings,” said the short-seller, adding that the explanations “simply defy common sense”.
“Adani’s response consists of irrelevant corporate initiatives, such as how it encourages female entrepreneurship and the production of safe vegetables,” said Hindenburg.
The Adani Group, in its statement on Sunday, said the conduct of the American firm “is nothing short of a calculated securities fraud under applicable law” and added that it would pursue remedies to safeguard its stakeholders.
“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India,” the statement said.
Hindenburg said the Adani statement “tried to lead the focus away from substantive issues and instead stoked a nationalist narrative”.
“The Adani Group has attempted to conflate its meteoric rise and the wealth of its Chairman, Gautam Adani, with the success of India itself,” it said.
“We disagree. To be clear, we believe India is a vibrant democracy and an emerging superpower with an exciting future,” said Hindenburg.
Hindenburg’s allegations of fraud erased $51 billion of Adani’s flagship firm’s market value. The firm’s report claimed that the Adani group had links with offshore tax havens and that its exposure to high debt was a concern. The report also claimed that Adani group’s stock price was inflated and had significant downside risks.
Seven listed companies belonging to the Adani conglomerate saw sharp falls in their values after the report.
The secondary share sale by Adani Enterprises opened for retail and institutional investors on Friday but saw only 1% subscriptions as the company’s stock fell 11% below the minimum offer price. The Adani Group said the sale remained on schedule at the planned issue price.