Hindenburg Research's Latest Allegations Against Adani Group: A Renewed Controversy

Hindenburg Research, a U.S.-based short-seller, has once again placed the Adani Group under intense scrutiny with fresh allegations involving Madhabi Puri Buch, the head of India's Securities and Exchange Board (SEBI). These allegations have reignited a debate that has been ongoing since Hindenburg's initial report in January 2023, which accused the Adani conglomerate of stock manipulation and fraudulent accounting practices.

Hindenburg’s Initial Report and Its Aftermath

In January 2023, Hindenburg Research released a bombshell report accusing the Adani Group of “brazen accounting fraud” and “stock manipulation.” The report alleged that the conglomerate used a complex network of offshore entities to manipulate stock prices and evade taxes. The fallout from this report was immediate and severe, with Adani Group’s market value plummeting by over $150 billion. The accusations forced the company to cancel a substantial $2.5 billion share sale, leading to widespread concern among investors.

The Adani Group has consistently denied these allegations, labeling them as "unresearched" and "malicious." Despite these denials, the report triggered one of the most significant sell-offs in Indian corporate history, leading to questions about the integrity of India's financial markets and regulatory framework.

Allegations Against SEBI Chief Madhabi Puri Buch

In a new twist to the saga, Hindenburg Research has alleged that Madhabi Puri Buch, who currently heads SEBI, previously held investments in offshore funds linked to the Adani Group. The report claims that Buch and her husband held stakes in an offshore fund where a substantial amount of money was invested by associates of Vinod Adani, the brother of Adani Group Chairman Gautam Adani. These investments, according to Hindenburg, were made in 2015, two years before Buch took over her role at SEBI.

Buch has categorically denied these allegations, calling them baseless. In a personal statement, she asserted that all disclosure requirements had been diligently followed and that the investments referred to by Hindenburg were made in her private capacity before her tenure at SEBI began. She promised to release a more detailed statement to address the concerns raised by the report​.

Political and Legal Repercussions

Hindenburg’s fresh allegations have sparked a political storm in India. Opposition parties have demanded a thorough parliamentary investigation into the Adani Group's activities and SEBI's role in overseeing them. They argue that the allegations, if true, represent a serious conflict of interest that could undermine the credibility of India’s market regulator.

The Supreme Court of India has also played a role in this ongoing controversy. In March 2023, the Court set up a committee led by retired Supreme Court judge A.M. Sapre to examine the regulatory framework and determine whether there had been any failure on SEBI's part. The committee's findings suggested that the allegations of stock price manipulation by the Adani Group could not be substantiated at that time. However, the Court directed SEBI to continue its investigations, particularly focusing on foreign portfolio investments​.

Adani Group’s Response and Market Impact

The Adani Group has vehemently denied the latest allegations, describing them as "red herrings" and an attempt by Hindenburg to malign the conglomerate’s reputation. A spokesperson for the group stated that the company’s overseas holding structure was fully transparent and compliant with Indian laws. They emphasized that Adani Group has no commercial relationship with the individuals or entities mentioned in Hindenburg's report.

Despite the ongoing controversy, Adani Group’s stocks have shown signs of recovery. After losing as much as 80% of their value following Hindenburg’s initial report, several of Adani’s companies, including Adani Ports and Adani Enterprises, have regained much of their lost market capitalization. However, the group's overall market cap remains significantly below its peak, indicating that the scars from the Hindenburg saga are yet to heal completely​