ADANI-HINDENBURG ISSUE (Syllabus: GS Paper 3 - Economy)

Context: The Securities and Exchange Board of India (Sebi) has concluded all barring two of its investigations into the allegations made by US-based short-seller Hindenburg Research against Gujarat-based conglomerate Adani Group, the market regulator submitted in its status report to the Supreme Court.

Adani-Hindenburg matter

• Hindenburg Research has alleged that the Adani Group was “engaged in a stock manipulation and accounting fraud”. 
• The Adani Group has interests in varied sectors such as ports and logistics, power generation, agribusiness, real estate, defence, solar energy, financial services, natural resources and media.
• The research firm alleges that the Adani group has engaged in ₹17.8 trillion (US$ 218 billion) brazen stock manipulation and accounting fraud schemes over the course of decades.
• The Hindenburg’s report says that the Adani family controlled offshore shell entities in tax havens spanning the Caribbean and Mauritius to the United Arab Emirates, which it claims were used to facilitate corruption, money laundering and taxpayer theft, while syphoning off money from the group’s listed companies.
• Adani group has taken a lot of debt from Indian banks. 
• So there is a looming threat around whether the business tycoon would be able to return the debt on time or not.
• There is risk involved in banks lending huge sums of money against shares since when a company is unable to fulfil its debt obligations its share price also often drops.

• LIC has also invested its money in the Adani group business. 

• The investment fell sharply due to the report and there is a fear among the investors regarding the loss of money.