February 12, 2023

Adani: Saga of Fraud, Manipulation and Unprecedented Official Patronage

Nilotpal Basu

ALL hell has broken loose. It is bloodbath of Adani group’s publicly traded shares. And it continues to bleed since the 129-page report by Hindenburg Research which flagged concerns about the conglomerate’s debt levels and use of tax havens was made public. Hindenburg’s claim that Indian tycoon Gautam Adani has overseen “largest con in corporate history” is stinging. The report is a meticulous culling out and collating of available material in the public domain, save certain classified leaked emails.

The report has pointed out that the Adani group has seven publicly listed companies and 578 subsidiaries largely controlled and managed by him and his family. These companies had a market value of US$ 200 billion before the report was made public. But in the topsy-turvy in its aftermath has made half the value of Adani’s wealth to go up in smoke. The report alleges improper use of offshore tax heavens and stock manipulation by the group. Analysing the public documents of the group companies, the report has raised concerns about high debt and valuation of seven listed companies of the group. Of course, it has detailed the modus operandi of the corporate conglomerate’s round tripping, use of shell companies to bloat the share prices and the pledging of these hugely overvalued shares to public financial institutions and bodies and pledging that in the listed companies to manipulate their valuation. These shell companies have been traced to Mauritius, Cyprus and UAE. 

The fact that most of these materials were already available in the public domain and warranted thorough investigation by the government agencies and statutory regulators, but failing to prompt an appropriate enquiry has led to the huge impact that Hindenburg has come to enjoy among the investors and the general public.

Though initial response of the Adani group was devoid of any substance, largely overloaded with  politics of ‘nationalism’; dubbing the report as ‘unresearched’ and an attack on India; arrogating to itself the description of some critics that ‘Adani is India’. But obviously this fell short to dispel public perception. Not only did the bloodbath continue, but the public FPO (followup public offering) had to be eventually scrapped despite the claim of oversubscription. Though moral ground was cited, the revelation that it was not due to retail investors’ enthusiasm, but rallying of fellow HNI (high networth individuals) from the corporate clan and perhaps, Adani’s own money. Similarly, dollar denominated bond offer has been also shelved. The unprecedented developments, therefore, urgently demand a high-level enquiry monitored by the highest judiciary.


Gautam Adani is credited for a corporate group which is the biggest private operator of ports, as well as, the largest private producer of electricity. The group has substantial interest in sectors like coal mining, oil and gas exploration, gas distribution, transmission and distribution of electricity, civil construction, infrastructure, multi-model logistics, international trade, education, real estate, edible oil, food storage and the latest a near monopoly of running airports. The group currently trades in over 30 commodities with at least 28 countries.

Till September 2014, (when the Modi government assumed office) the market capitalisation of the group had a personal wealth of US$7.1 billion as reported by Forbes.

Gautam Adani was a college dropout. After a successful stint as a diamond trader, he moved to Ahmedabad in 1981, to help start a cousin’s firm for trading in PVC. He set up Adani sports in 1988 as a commodity trading venture. It was successful in drawing attention in Gujarat. He also started attracting controversies, but the size of the business had no hint that he will eventually turn out to be the second wealthiest person of the world.

It all started with the Gujarat communal violence which caused the most difficult moment for Modi’s political career. There were calls for his ouster, with even Prime Minister Vajpayee raising questions about his conduct as the chief minister. The industrialists shunned him after the stinging criticism of the CII. Adani stepped in and created a rival body – resurgent group of Gujarat in protest splitting the Confederation. The resurgent group was spearheaded by Adani for sponsoring Vibrant Gujarat Summit for creating the fandom around Modi and his fabled Gujarat model – the main plank for the Modi 2014 campaign.

Adani invested with zeal in the aftermath of the communal violence and helped in transforming Modi image – when he was being treated, almost as a pariah. These started a reciprocal and mutually convenient partnership.

Between 2002 and 2014 Modi has backed Adani to the hilt. The first sign was the land deal when 7,350 hectares was handed over to Adani around Mundra port at a throw away price of 1 cent a square meter, far less than even the concessional rate which was offered to fellow industrialists. Apart from the price, the group was exempt from payment of all stamp duties for thousands of acres of land acquired for SEZ. They were also in flagrant violation of environmental and tribal regulations. It is another matter that Adani further let out the land for US$11 per square metre, at hundred times more inflated price. The CAG has also flagged the huge benefits given by Gujarat State Petroleum Corporation to the tune of Rs 70 crores with Modi as the CM, controlling the GSPC.

In 2012, the UPA imposed a Rs 200 crores fine on the Adani group for “destruction of local ecology, mangroves and illegal reclamation of land for the Mundra projects North Port and SEZ.” The Gujarat government under Modi opposed the fine underlining that when it comes to protect Adani’s interest, Modi will not shy away from sacrificing environmental concerns.

However, ahead of Modi’s assumption of office as prime minister, it was on an altogether different trajectory. Even for the 12 months after Modi was officially declared as BJP’s PM candidate, the market price of the share of Adani enterprises jumped by a whopping 65 per cent. Over a decade, Adani group’s turnover rose more than 24 times from Rs 3,741 crores in 2001 to Rs 75,659 crores in 2013-14.

If the prospect of CM Modi becoming PM Modi commands such astronomical appreciation of Adani shares, the anticipation have not disappointed Adani-Modi acolytes.

The widespread environmental violations were one of the first areas where pre-Modi deterrence was removed.  The fine levied on the Mundra project was surreptitiously withdrawn. Similarly, Modi government removed the tribal affairs secretary to redefine forest land to clear the Adani coal mining project in Chhattisgarh.

The arm twisting of public sector financial institutions for securing the interest of the Adani group was evident in the MoU signed by the SBI for a loan of US$1 billion for a controversial coal mining project in Queensland. The loan was for a major project that would entail developing a coalmine, commissioning a railway line and revamping of a port which was feared to majorly impact the ecosystem of the Great Barrier Reef. Most of the globally well-known banks had withdrawn their support to the project, finally, shelving the project itself. As a result SBI’s proposed loan also got a quiet burial.

The DRI enquiry report instituted to probe allegations of overvaluation of capital equipment imports against the Adani group – the DRI’s conclusive internal report of December 2013 that an amount of Rs 2322.75 crores had be siphoned off – was given a quiet burial by the Modi government.

But perhaps the biggest complicity of the Adani groups’ irregularities were over loot by the non-action of regulators, SEBI and the Department of Company Affairs who had looked the other way, given the track record of the principal players of the Adani group by the regulators in the past. There is clear proof as to how Vinod Adani had been coordinating 38 Mauritius shell entities. Apart from this, there are other shell entities controlled by Vinod in Cyprus, the UAE, Singapore and several Caribbean islands. There is a clear attempt that these entities do not have any sign of activity and have same addresses and virtually no publicly stated specific services. These shells ensured stock parking/stock manipulation through Adani’s private companies in order to maintain the appearance of activity, financial health and solvency.

The distinct feature of Adani group of companies as compared to most other top corporates is their incapacity to earn enough revenue to fund the debt. What would surprise not just Hindenburg research, but other analysts is the fact that five of the seven listed companies of the Adani group, the PE Ratio is less than one indicating this. Out of the 25 top operating officials of the Adani group companies, eight are close family members of Gautam Adani making it a family business. Structurally, the Adani group is more prone to carry out insider trading, round tripping and manipulation which are all legally debarred in terms of stock market regulations. SEBI has confirmed that for more than a year and a half, they have initiated an investigation about Adani controlled offshore funds. Another interesting feature is that most of the offshore funds which mobilised resources for the Adani group seemed to be invariably investing almost exclusively (more than 90 per cent in all cases) in this group. Violations are so wide and obvious that they do not require any expert regulators’ scrutiny to establish and initiate penal action against the group and its capital market activity. These could not have happened but for complicity at the highest level.

The crop of ultra-right politicians that have appeared in the contemporary political landscape like Boris Johnson, Nigel Farage, Donald Trump, Narendra Modi, Jair Bolsonaro, Recep Tayyip Erdoğan –  the ludicrous strongmen – dominate nations that would once have laughed them off stage. The question is why? Why are the technocrats who held sway almost everywhere a few years ago giving way to extravagant loud mouths?

Explaining this global context of the resurgence of the ultra-right, the Guardian columnist George Monbiot offers, “The way capitalism functions has changed. The dominant force of the 1990s and early 2000s – corporate power – demanded technocratic government. It wanted people who could simultaneously run a competent, secure state and protect profits from democratic change. But, today corporate power is overlain by – and mutating into – oligarchic power”.

The theorist, Steve Bannon, who spearheads these ultra-right leaders’ thought process, points out that they seek the “deconstruction of the administrative state”. Chaos is the profit multiplier for the disaster capitalism on which the new billionaires thrive. Every rupture is used to seize more of the assets on which our lives depend.

These leaders force distraction and deflection. While the kleptocrats fleece the people, they advocate looking elsewhere. They encourage channeling the anger that should be reserved for billionaires towards vulnerable sections with identities who could be excluded in a majoritarian project and customary scapegoats. Just as it was in the 1930s, ‘the new demagoguery is a con, a revolt against the impacts of capital, financed by capitalists’.

The oligarch’s interests always lie offshore: in tax havens. Paradoxically, these interests are best promoted by hyper nationalists. The politicians who most loudly proclaim their patriotism and defense of sovereignty are always the first to sell off the national assets.


In 2014 when Modi became the prime minister in the Forbes list of the global wealthiest, Adani’s rank was 609. This rank went up to 2 by the end of 2022. Obviously, such meteoric rise would attract global scrutiny. Hindenburg’s observation flowing from their research into the activities of the Adani group has concluded that the Adani group seems to have acted with ‘an air of impunity’. In the backdrop of Gujarat government’s largesse to Adani when Modi was the chief minister and the rise and rise of Adani after Modi has become the prime minister of the country in 2014, this observation appears to be almost inescapable.

The Modi government has been charged of buying out people opposed to the BJP through money power and the brazen use of statutory and supposedly independent agencies like IT, ED and CBI. Such operations have featured switching sides by opposition MPs and MLAs and securing of state governments. Much in the same manner IT, ED and CBI appears to be indulging in activities which have facilitated purchase of companies and assets by Adani. October 10, 2018 IT raided on Krishnapatnam Port and Navyug offices. On October 6, 2020 Adani bought 75 per cent stake in Krishnapatnam port. April 6, 2021 Adani managed to buy 100 per cent stake in the port. On December 10, 2020 CBI raided on ACC, Ambuja, Ultratech cement companies. October 16, 2022 Adani manages to buy stake in ACC and Ambuja cements. On July 2, 2020 CBI registered FIR against GVK owners and GVK Mumbai airport management. July 18, 2020 ED raided GVK offices in Mumbai and Hyderabad. August 31, 2020 GVK sold Mumbai airport to Adani. Can the implications of the sequence of development leave anything to imagination?

The airport privatisation story is bizarre. How virtually all AAI run airports have come to be owned by the Adani group is mind blowing; for want of space the process cannot be detailed out. Particularly, the attempt by the LDF government of Kerala’s bid to have control over the Thiruvananthapuram airport through its state subsidiary entity brought out many of the defining features of such clearly monopolistic campaign. 

The manner in which the Adani groups have accessed funds from public financial institutions like LIC or SBI is also a case in point. The last few days the finance minister and the prime minister has maintained a chilling silence as they do whenever ‘chaukidars’ government appears  to have found itself in trouble.

However, the turbulence in the stock market and the bond market has led the Adani group to cancel its FPO and the dollar denominated bond offering. These have ramifications for the credibility of the Indian capital market and the overall economic management. Meanwhile, global financial agencies like Credit Suisse, Standard Chartered have initiated various actions. As much as the Indian government and the regulators maintained their ominous silence, the global implications are loud and clear as the nature of the global finance capital what is at stake is not merely the fortunes of Adani it is not just the Hindenburg report, but critical reports have also come out with sharply critical pieces as an opinion piece in the Financial Times points out – “Apart from the future of billionaire and its business empire, something bigger is on the line: India’s probity in corporate governance and pursuit of a development model in which the state has entrusted a few ultra-rich men with running India’s infrastructure and pioneering investments abroad.” No economy in this era can insulate itself from the global perception; Hindenburg report is only a pointer.

The global index agency is closely monitoring the affairs of the Adani group. And nothing would be accepted on face value.

Therefore, it is amply clear that notwithstanding the impunity of Adani and its group and the rally of his corporate brethren (and possibly its own funds) for subscribing its scrapped FPO, these cannot insulate the company from the fallout of global investors’ perception.  Neither does the handing over of Haifa port by Modi’s ideological soulmate, Benjamin Netanayahu erase that global perception.

The Modi government’s attitude and complicity with Gautam Adani was beyond crony capitalism. Adani’s companies have not been handed over a large chunk of India’s infrastructure to be the government’s first choice partners as a Bloomberg columnist states, “does the government want Indian companies to set up factories that make solar panel? Adani will oblige. Has the prime minster set a stiff renewable energy target? Adani will sign up to meet it. Are we worried we aren’t self-reliant in weaponry? Adani will undertake to create an “indigenous defense ecosystem under ‘make in India’”. Are policy makers worried about the semi-conductor supply chain? Gautam Adani will promise “a value chain that is fully indigenous and aligned with the geo-political needs of our nation”.

It is clear that if Adani goes down much of what is at stake for India will follow suit. In defending his impropriety and misdemeanor, Gautam Adani has banked on this vulnerability referring to criticism of Adani as an attack on India, clothing himself in the flag of ultra-nationalism.

RSS also has jumped into the fray by publicly defending Adani and dubbing the Hindenburg report as anti-India, engineered by groups from within, without missing out in its congenital animosity towards the Left. It is clear that the nexus which was forged following the Gujarat violence in 2002, this Adani affair epitomises the corporate-communal nexus under the stewardship of the Modi government.

Ultimately, this is capitalism regardless of the changing shades in terms of global finance and its machinations. The struggle for having inquiries into the Adani functioning, for transparency and the rule of law has to be directed against the Modi government and its complicit role. Therefore, the struggle for sensitising public opinion and that for an independent high-level enquiry has to continue.

Finally, this outrageous episode reminds us of the invaluable observations by Marx in Capital. Marx, concluding his chapter on the genesis of industrial capital in Capital, states: ‘Capital comes dripping from head to foot, from every pore, with blood and dirt’. And added ‘With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent will produce eagerness; 50 per cent, positive audacity; 100 per cent will make it ready to trample on all human laws; 300 per cent and there is not a crime at which it will scruple, nor a risk it will run, even to the chance of its owner being hanged.’ Adani’s outrage rekindles that imagination.