However, Adani now finds itself fighting for survival. New York-based short seller Hindenburg Research has accused the company of pulling the “largest con in corporate history” by using offshore tax havens to enact fraud and manipulate stock markets.
The report, which followed a two-year investigation by Hindenburg, claimed that Adani engaged in “brazen stock manipulation and accounting fraud” over decades.
Adani Group hit back, saying the allegations were “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”. It added that the claims were a “malicious combination of selective misinformation and stale, baseless and discredited allegations”.
Yet the impact on the Indian conglomerate was as swift as it was brutal. The company’s share price has halved since Hindenburg published its report two weeks ago, wiping around $100bn off its market value and $60bn off its chairman’s net worth.
Just days after the report was released, Adani was also forced to abandon a $2.4bn share sale as international investors steered clear of a company mired in chaos.
The fundraising was seen as a critical juncture for Adani, not only because it would have helped the company to slash its debts but also because it was regarded as a gauge of confidence in the industrial empire.
In the latest blow, Moody’s downgraded the outlook of four Adani companies to negative from stable on Friday.
The ratings agency said: “These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the group.”
While the crisis for Adani endures, the bigger issue at stake is India’s global reputation in terms of the integrity of its corporate governance rules and ability to attract international investment.
Modi’s attempt to accelerate its privatisation drive has drawn the ire of opposition politicians who accuse the premier of concentrating state assets in the hands of a few tycoons. Adani’s recent issues will only add fuel to the fire.
In 2017, a leaked government audit said Adani Power, a unit of the conglomerate, received “preferential treatment” from the state in the prices it was allowed to charge. The company denied the allegation.
Last week, Jairam Ramesh, general secretary of the opposition Congress party, asked: “What action has been taken, if ever, to investigate the serious allegations made over the years against the Adani Group?”
And in a jibe at Modi, he added: “Is there any hope of a fair and impartial investigation under you?”