New Delhi [India], January 28 (ANI): The Congress on Friday called for an investigation after a US-based research firm in its report raised concerns about the possibility of shares of Adani Group companies declining from their current levels owing to high valuations.
"But in an era of globalisation of Indian businesses and financial markets can Hindenburg-type reports that focus on corporate misgovernance be simply brushed aside and dismissed as being "malicious"? We fully understand the close relationship between the Adani Group and the current government. But it is incumbent on the Congress party as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest," Congress leader Jairam Ramesh said in a statement on Friday.
Jugeshinder Singh, the chief financial officer (CFO) of the Adani Group, on Wednesday said the conglomerate was "shocked" by the Hindenburg Research's report and termed it a "malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts".
The Congress statement added that normally a political party should not be reacting to a research report on an individual company or business group prepared by a hedge fund.
"But the forensic analysis by Hindenburg Research of the Adani Group demands a response from the Congress party. This is because the Adani Group is no ordinary conglomerate: it is closely identified with Prime Minister Narendra Modi since the time he was Chief Minister of Gujarat," the statement added.
"Furthermore the high exposure of financial institutions such as the Life Insurance Company of India (LIC) and the State Bank of India (SBI) to the Adani Group has implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system. It is worth noting that earlier reports had described the Adani Group as "deeply over-leveraged". The allegations require serious investigation by those who are responsible for the stability and security of the Indian financial system, viz - the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI)," it said.
"The Hindenburg report alleges "brazen stock manipulation" and "accounting fraud" by the Adani Group via "a vast labyrinth of offshore shell entities," Ramesh claimed.
"The evolution and modernisation of India's financial markets since the 1991 reforms have aimed to improve transparency and level the playing field for domestic and foreign investors. It has specifically sought to increase the transparency of financial flows into the country -- to prevent round-tripping and money laundering by actors that could include criminals, terrorists and hostile countries -- and to reduce dependence on offshore tax havens," it added.
"The allegations of financial malfeasance would be bad enough, but what is worse is that the Modi government may have exposed India's financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC, SBI and other public sector banks," Ramesh said.
"These institutions have liberally financed the Adani Group even as their private sector counterparts have chosen to avoid investing because of concerns over corporate governance and indebtedness. As much as 8 per cent of LIC's equity assets under management, amounting to a gigantic sum of Rs 74,000 crore, is in Adani companies and comprise its second-largest holding," the statement added.
"None of this will be easy. In recent years, the Adani group has built monopolies in ports and airports and become an overwhelmingly dominant player in power, roads, railways, energy and media. In perhaps the most egregious case of crony capitalism, the previous operator of Mumbai's Chhatrapati Shivaji Maharaj International Airport, India's second busiest airport, was raided by the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) after it rejected an offer by the Adani Group. The operator agreed to sell the airport to Adani a month later and it is a mystery what happened to the ED and CBI cases thereafter," it added. (ANI)